CEQA traffic chaos: is Neighbors for Smart Rail about to crash into Sunnyvale?

In a potentially major development for real estate and infrastructure projects across the state, the California Court of Appeal for the Second District is poised to clash with the Sixth and Fifth Districts over how lead agencies are supposed to analyze potential traffic impacts under the California Environmental Quality Act (CEQA). If so, that could be very welcome to many public agencies across California, and to many people working to get projects moving in California.

In less than a one-year period — from December 2010 to November 2011 — three California appellate court opinions upended the way many jurisdictions across California have long analyzed proposed projects’ potentially significant traffic impacts, sending many cities, counties, and project applicants into a frenzy of activity to change long-held practices to conform to the sudden shift in case law. Many projects already well under way had to halt abruptly to redo their traffic assessments, and at least one case had this issue raised for the first time after the project had been approved and was being challenged in court. The Superior Court ultimately concluded that it had to apply the new cases to overturn a traffic assessment prepared before the first of these cases came down and that no one had previously criticized on this basis.

Those three cases — Sunnyvale West Neighborhood Association v. City of Sunnyvale City Council (Sunnyvale 1, Dec. 16, 2010, Sixth Dist.),¹ Madera Oversight Coalition, Inc. v. County of Madera (Madera, Sept. 13, 2011, Fifth Dist.),2 and Pfeiffer v. City of Sunnyvale City Council (Sunnyvale ², filed, Oct. 28, 2011, published Nov. 22, 2011, Sixth Dist.)³ — held that CEQA traffic assessments had to compare projects to the existing conditions during the project approval process, and not just to the expected future traffic conditions that would exist when the project is actually built-out, even where a project will not be built out for many years or decades.

Last week, however, the Second District issued a tentative opinion in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, et al. (Court of Appeal Case No. B232655), which if it is issued in substantially that form, may give fresh hope that the way traffic studies have long been performed in many jurisdictions across California is acceptable.

Oral argument is scheduled for March 23. We expect this case to be closely watched.

The Proper Baseline for Assessing Traffic Impacts

California public agencies use CEQA documents such as environmental impact reports (EIRs) or negative declarations to evaluate potentially significant environmental impacts of proposed development projects. CEQA documents ordinarily compare a project’s potential impacts against existing physical conditions. Section 15125(a) of the State CEQA Guidelines specifies that in evaluating a project’s significant impacts on the environment, a lead agency “should normally limit its examination to changes in the existing physical conditions in the affected area as they exist at the time the notice of preparation is published, or where no notice of preparation is published, at the time environmental analysis is commenced. This environmental setting will normally constitute the baseline physical conditions by which a lead agency determines whether an impact is significant.”⁴

Until recently, many public agencies in California assessed a project’s traffic impacts against the intersection, roadway and freeway conditions projected to occur upon the completion of a project. The rationale for that was basic common sense — if a project will not be completed for many years, the most accurate description of its impact might be to show how the project could impact the traffic situation when it actually causes new traffic, rather than imagining that a long-term project is fully built and operating the day it is approved.

However, under the Sunnyvale 1, Madera, and Sunnyvale 2 cases, that common sense approach long used in many California jurisdictions was rejected. Read together, those three cases indicated that while a lead agency retains discretion when selecting the baseline against which to compare a project’s traffic impacts, that agency cannot solely assess those impacts against anticipated future conditions but must instead also use, as the primary CEQA traffic assessment, an assumption that the project is fully operational by the date on which it is approved. The Neighbors for Smart Rail court seems poised to take a different stand.

This Client Alert summarizes these cases below.

Sunnyvale 1

Sunnyvale 1 involved a challenge to the City of Sunnyvale’s proposal to extend a local road providing access to residential and commercial areas of the City.⁵ Due to a lack of funding, the City did not anticipate completing the project until approximately 2020.⁶ The project’s EIR assessed the impact the project would have on traffic in the area, by comparing its traffic to expected traffic conditions in 2020, reasoning that the project would not likely be completed, and the road not operational, until then.

The Court of Appeal for the Sixth District held that the EIR violated CEQA because it used an invalid baseline against which to measure projected traffic impacts resulting from the project.⁷ The court stated that CEQA requires an EIR to compare the project’s potential traffic impacts to the traffic conditions that currently exist.⁸ The court added that while an analysis of the projected impact on traffic conditions in 2020 was informative, it was not a substitute for evaluating the impact the project would have on existing traffic conditions. Ultimately, the Sunnyvale 1 court held that while a lead agency has some discretion in choosing the baseline used for a project’s traffic analysis, it cannot select a point later than the certification of the EIR, even when the evidence shows that the project will not be built for a very long time.

Madera

Sunnyvale 1 sent shockwaves throughout the community that works to comply with CEQA, leaving agencies scrambling to figure out how revise their traffic analysis guidelines to comply with the ruling. Just nine months after Sunnyvale 1’s publication, the Court of Appeal for the Fifth District issued the Madera decision, which expanded on Sunnyvale 1. In Madera, project opponents challenged a county’s approval of a mixed-use development project, including challenging the EIR’s analysis of the project’s traffic impacts on two grounds: first, that CEQA requires an EIR to compare the project’s likely impact on traffic to existing conditions; and second, that the EIR erroneously used estimated future conditions as the baseline.⁹ In assessing the first challenge, the court embraced the reasoning of Sunnyvale 1, concluding that “(a) A baseline used in an EIR must reflect existing conditions; (b) lead agencies do not have the discretion to adopt a baseline that uses conditions predicted to occur on a date subsequent to the certification of the EIR; and (c) lead agencies do have the discretion to select a period or point in time for determining existing physical conditions other than the two points specified in subdivision (a) of Guidelines section 15125, so long as the period or point selected predates the certification of the EIR.”¹⁰

With respect to the second challenge, the court noted that the EIR assessed three different traffic scenarios: (1) existing traffic conditions; (2) far-term (cumulative) baseline conditions (2025); and (3) far-term (cumulative with project conditions (2025)).¹¹ The county maintained that despite the two future scenarios analyzed, the detailed discussion of the existing traffic conditions made clear that the baseline used in the EIR was that of existing conditions. The court disagreed, stating that the EIR never explicitly stated that existing conditions constituted the baseline. Because the court thought the EIR failed to identify the baseline clearly enough, it held that the EIR was inadequate.¹²

Sunnyvale 2

Eleven months after the surprising Sunnyvale 1 decision, a different division in the Sixth District issued Sunnyvale 2, a case involving a challenge to a medical campus expansion project. In Sunnyvale 2, as in Sunnyvale 1 and Madera, project opponents alleged that the EIR was deficient because it used the wrong baseline for determining the project’s traffic impacts.¹³ In response, the city argued that CEQA does not mandate the use of a particular baseline to assess traffic impacts, and that a baseline that deviates from existing conditions is permissible.¹⁴ The city pointed out that the EIR analyzed four different traffic scenarios:¹⁵ (1) existing conditions obtained in 2007 from traffic counts representing peak one-hour traffic conditions during the morning and evening commute periods; (2) background conditions, defined as existing peak-hour volumes multiplied by a growth factor, plus traffic from approved but not yet constructed developments in the area; (3) project conditions, defined as background peak-hour traffic volumes plus traffic generated by the proposed project; and (4) cumulative conditions, defined as existing volumes multiplied by a growth factor, plus traffic from approved, but not yet constructed, and pending developments in the area.

The Sunnyvale 2 court held that “predicted conditions may serve as an adequate baseline where environmental conditions vary,” and that as “‘[e]nvironmental conditions may vary from year to year . . . in some cases it is necessary to consider conditions over a range of time periods.’”¹⁶ Here, the city presented substantial evidence indicating that traffic conditions near the project could differ from existing conditions “due to a forecast for traffic growth and the construction of alreadyapproved developments.”¹⁷ The Sunnyvale 2 court also distinguished Sunnyvale 1, on the grounds that the ruling in Sunnyvale 1 turned on the fact that, there, the city used only predicted future conditions as part of their traffic analysis.¹⁸ In Sunnyvale 2, however, the city analyzed the project’s traffic impacts using several baselines, but critically, it did not limit the analysis to future conditions. Reaffirming Sunnyvale 1, the court also noted that an analysis of future traffic conditions may be necessary to an informed understanding of a project’s impacts further in time.¹⁹ Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, et al. In a rare move that would be welcomed by many agencies and project proponents, last week the Second District released a tentative opinion, proposed for partial publication, which would directly reject Sunnyvale 1 in a very important case involving a CEQA challenge to Phase 2 of the Expo rail line planned to bring commuters from Culver City to Santa Monica. Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, et al. (Case No. B232655), is set for oral argument before Division Eight of the Second District on March 23, and based on the tentative opinion it appears that the appellate justices are very focused on the impractical results of Sunnyvale 1 and its progeny.

There, project opponents challenged the Expo Phase 2 EIR claiming that it improperly used projected future conditions as a baseline for analyzing environmental impacts (traffic, air quality and greenhouse gas emissions). The tentative opinion emphatically rejects Sunnyvale 1. The tentative opinion states: “in a proper case, and when supported by substantial evidence, use of projected conditions may be an appropriate way to measure the environmental impacts that a project will have on traffic, air quality and greenhouse gas emissions,” and that “[a]n analysis of the project impacts on 2009 traffic and air quality conditions would rest on the false hypothesis that everything will be the same 20 years later.”

The court’s tentative further states: “[W]e reject the notion that CEQA forbids, as a matter of law, use of projected conditions as a baseline. Nothing in the statute, the CEQA Guidelines, or [CBE v. SCAQMD] requires that conclusion. To the extent Sunnyvale and Madera purport to eliminate a lead agency’s discretion to adopt a baseline that uses projected future conditions under any circumstances, we disagree with those cases.” Also, “[E]xisting conditions — 2009 population and traffic levels — are not static, are not in any sense a ‘realistic’ baseline from which to measure the traffic and air quality impacts of a long-term rail infrastructure project. On the contrary, measuring those impacts against the conditions that are projected to exist when the project is fully operational in 2030 (based on reasonable demographic projections) as compared with future 2030 conditions if the project is not built is, it seems to us, eminently realistic.”

In rare and refreshingly direct language, the court’s tentative states: “Sunnyvale cites no authority for its own conclusion that use of a baseline of current conditions ‘is the only way’ to identify impacts ‘specific to the project alone’. . . — and we find that conclusion is erroneous when applied to traffic and air quality impacts of a long-term infrastructure project, the very purpose of which is to improve traffic and air quality conditions over time.”

Further, the tentative states: “We construe the Guidelines to permit analysis of environmental impacts using a baseline other than the environmental setting as it exists when the notice of preparation of an EIR is published or when environmental analysis is begun. . . . We see no rational basis for Sunnyvale’s constructed view of the word ‘normally.’”

Conclusion

With public policies increasingly encouraging sustainable growth and reduction of vehicle emissions (including transit-oriented development), and with traffic often being a major focus of project opponents, it has never been more difficult to prepare a legally defensible traffic analysis under CEQA. After a year and a half of new confusion, litigation risk and increased costs for repetitive traffic assessments, it appears that the case law may make another major evolution soon. While the flexibility and common sense evidenced in the Neighbors for Smart Rail tentative opinion will be welcome to many, it also appears that the case law may be unsettled in this area for some time to come.