Last week, the Second District Court of Appeal issued its decision in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (April 17, 2012) (Case No. B232655), a high profile case involving construction of a light speed rail line connecting downtown Los Angeles to Santa Monica. In an opinion that explicitly rejects recent rulings out of the Fifth and Sixth District Courts of Appeal, the Second District held that the California Environmental Quality Act (CEQA) does not prohibit, as a matter of law, use of future conditions as the baseline for measuring a project’s environmental impacts. The court found that “when supported by substantial evidence,” use of projected future conditions “may be an appropriate way” to measure the environmental impacts that a project will have on traffic, air quality and greenhouse gas emissions.

Recent “Baseline” Cases Under CEQA

The Smart Rail decision is the latest in a recent string of “baseline” cases involving evaluation of traffic and air quality impacts from long-term infrastructure projects under CEQA. The environmental impact report (EIR) for the light rail project used projected future traffic and population conditions for the year 2030 as the “baseline” against which to measure the project’s traffic and related impacts.

It was exactly this kind of future conditions baseline that was recently held invalid as a matter of law under CEQA by two different California Courts of Appeal. In Sunnyvale West Neighborhood Assn. v. City of Sunnyvale City Council (2010) 190 Cal.App.4th 1351, the Sixth District found that projected 2020 conditions provided an improper baseline for determining traffic, noise and air quality impacts of a roadway extension project. In 2011, the Fifth District agreed, and in the case of Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48 (involving residential and commercial development of approximately 1,500 acres), held that, as a matter of law, lead agencies do not have discretion to adopt a baseline that uses conditions predicted to occur on a date subsequent to approval of the project. These two rulings have left many agencies scrambling to revamp their long-established methodologies for analyzing traffic and related impacts of long-term projects.

Court Notes That Population Growth Is “Inevitable”

In Smart Rail, the Second District Court of Appeal explicitly rejected Sunnyvale West and Madera Oversight. The court noted that population growth, with its effects on traffic and air quality, is not “hypothetical” but “inevitable” in Los Angeles County. So while many people who live near the proposed light rail line might wish things to stay the same, the court opined, “no one can stop change.” In the face of that inevitable change, the court found that a decision to measure environmental effects of a long-term project by looking at those effects in the long term is a realistic and rational decision. By contrast, an assessment of the impacts of a long-term project against existing conditions would be based on the “false hypothesis” that nothing would change over time, and would “yield no practical information” to decision makers, thus frustrating the key purpose of CEQA.

Agencies Gain Some Comfort with New Ruling, But Conflict in Courts Remains

While the California Supreme Court will ultimately need to weigh in to resolve this conflict in the Courts of Appeal, the new ruling allows agencies some comfort that they may not have to abandon long-established methods of comparing long-term projects against future traffic conditions. The Smart Rail decision also has important implications for evaluation of air quality impacts - including criteria pollutants, toxic air contaminants and greenhouse gases - all of which are expected to improve in the future based on existing mandates for cleaner cars, fuels and energy.

While the new ruling provides hope that agencies will be allowed more discretion in analyzing long-term projects, the Sunnyvale court’s rejection of the future baseline approach continues to create legal uncertainty. Therefore agencies should consider providing both assessments (existing and future baselines) in their EIRs until the state’s highest court resolves the conflict.