Why it matters: In upholding the approval of a 260-acre expansion to the Potrero Hills Landfill, this decision provides important guidance regarding the evidence that may be used to support a lead agency’s determination that a reduced-size project alternative is economically infeasible under CEQA. Specific evidence of the alternative’s net profit or loss is not necessary to demonstrate economic infeasibility. Rather, applicant-provided information showing the anticipated costs and revenues of the proposed project and alternative may constitute substantial evidence to support an infeasibility finding. The court emphasized that evidence in the record should provide “some context” that allows for an economic comparison.
Facts: Waste Connections applied for permits to expand the 320-acre Potrero Hills Landfill in Solano County by adding 260 acres to the site and extending its life by 35 years. The Landfill is located in the upland area of the Suisun Marsh. Solano County Ordinance section 31-300 prohibits modification of a marsh watercourse unless there are no other reasonable alternatives. Based on information provided by the applicant, Waste Connections, the San Francisco Bay Conservation and Development Commission (BCDC) determined that a reduced-size alternative that would add only 127 acres (instead of the proposed 260) and avoid a portion of a marsh watercourse was not “economically realistic.” Waste Connections provided evidence to BCDC that the smaller alternative would result in a 30 percent reduction in landfill capacity and a 45 percent reduction in revenue, but would only decrease the cost of the project by 10 percent. Waste Connections further explained that its profit margins were typically around 9 percent, giving it only a small margin of error for operating new or expanded sites. Accordingly, given the significant decrease in gross revenue, the project would not be “financially viable.” Waste Connections declined to provide further financial detail, such as net profit or loss, characterizing the information as confidential. BCDC approved the proposed expansion with only a slight reduction in its height, concluding that the reduced-size alternative was not “economically realistic.”
Petitioner SPRAWLDEF claimed that no substantial evidence supports BCDC’s finding that the reduced-size alternative is not economically reasonable.
Decision: Under CEQA, “[t]he 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.” [Citations.] Thus, when the cost of an alternative exceeds the cost of the proposed project, “it is the magnitude of the difference that will determine the feasibility of this alternative.” (Center for Biological Diversity v. County of San Bernardino (2010) 185 Cal.App.4th 866, 883). Ultimately, “the question is . . . whether the marginal costs of the alternative as compared to the cost of the proposed project are so great that a reasonably prudent [person] would not proceed with the [altered project].” (Uphold Our Heritage v. Town of Woodside (2007) 147 Cal.App.4th 587, 600 (Woodside).
Relying on CEQA’s definition of “feasible” and CEQA case law pertaining to economic infeasibility, the court determined that the reduced-size project alternative was not a reasonable alternative. The court distinguished this case from other CEQA cases in which a meaningful comparison of the project and the alternatives was not possible because there was no evidence regarding the cost of the alternatives. The court also expressly rejected the view that Waste Connections should have produced more economic data showing net profit figures. Waste Connections provided economic evidence for both the proposed expansion as well as the alternative showing the cost, capacity, and anticipated gross revenue. The court concluded that this evidence allowed the BCDC to make an economic comparison between the proposed expansion and alternative, providing “some context” to fairly determine that the reduced-size alternative was not economically reasonable.
The court also recognized that the rejection of the reduced-size alternative was not based solely on economics, but noted that BCDC also found that the alternative would still require modifications to the watercourse, and that rechanneling the watercourse as proposed by the project would actually improve marsh water quality.
Practice Pointers:
- Arguably, this case lowers the bar just a little for what information may constitute substantial evidence to support an economic infeasibility finding. Confidential information showing net profit or loss need not be provided, but applicant-submitted information must be sufficiently detailed to allow the court to compare the project and the alternative.
- What is sufficient will depend on the particular context. The court was clear to point out that bald assertions that a particular alternative is not economically feasible will not suffice. At a minimum, the record must contain some economic data on both the project and alternative(s) to provide the decision maker with “some context” to make a comparison.
- As economic information pertaining to costs and revenue often can be confidential, and the courts have not established a bright-line test on the amount of economic information that must be provided, the safest course would be to: (1) avoid making economic infeasibility findings, where possible, relying instead on other reasons to support the rejection of alternatives; and (2) as in this case, cite to multiple independent bases why an alternative is infeasible, each supported by substantial evidence in the record.
