In a much-anticipated decision filed August 5, 2013, the California Supreme Court held that CEQA requires a lead agency to assess a project’s environmental impacts against an “existing conditions” baseline – and consequently disallows sole reliance on a “future conditions” baseline – unless the agency shows “by substantial evidence that an analysis based on existing conditions would tend to be misleading or without informational value to EIR users.” Neighbors for Smart Rail v. Exposition Metro Line Construction Authority, et al (8/5/13) ___ Cal.4th ___, 2013 WL 3970107. In resolving a split of authority among the District Courts of Appeal on the issue, the high court itself was divided: While six justices agreed on the result of affirming the Court of Appeal’s judgment upholding denial of a writ, and four agreed on the rule stated above, three justices believed lead agencies should be given greater discretion to select the CEQA baseline, and one justice believed the EIR’s failure to include the “existing conditions” baseline analysis required by CEQA under the majority’s rule was prejudicial error requiring that the EIR and project approval be set aside. The bottom line is that defendant Exposition Metro Line Construction Authority (Expo Authority) may proceed to construct its light-rail transit line from Culver City to Santa Monica (the “Expo Phase 2” project), and CEQA practitioners now have some new environmental baseline rules to assimilate and employ when counseling their clients.

A few background facts are helpful for context, and to understanding the Court’s decision and its internal differences of opinion. The Expo Phase 2 project’s purpose is to provide high-capacity transit service between the City of Los Angeles’ (LA) Westside area andSanta Monica, accommodating population and employment growth, improving mobility for Westside’s large transit-dependent population, providing an alternative to congested roadways, and enhancing access to LA,Culver City,Santa Monicaand other destinations in the rail corridor. The Expo Authority issued a notice of preparation (NOP) for the Expo Phase 2 EIR in February 2007, circulated a draft EIR (DEIR) in January 2009, published its Final EIR (FEIR) in December 2009, and certified the FEIR and approved the project in February 2010. Thus, at least three years elapsed between (1) the commencement of environmental review and (2) the FEIR certification and project approval. While the project was anticipated to be constructed and operating by 2015, the EIR analyzed its traffic and air emissions impacts only against future background conditions projected to exist in year 2030.

Plaintiff Neighbors for Smart Rail (Neighbors) sued on several CEQA grounds; the superior court denied the requested writ petition in full, and the Court of Appeal affirmed, rejecting Neighbors’ CEQA claims on the merits. The Supreme Court then granted Neighbors’ petition for review, which raised two issues: (1) propriety of the EIR’s exclusive use of a future conditions baseline to assess the project’s traffic and air quality impacts; and (2) adequacy of adopted mitigation for street parking overflow impacts.

Key takeaways from the Supreme Court’s decision on the baseline issue include:

  • The CEQA environmental baseline against which project impacts are measured is “normally” the “existing conditions” baseline. (E.g., 14Cal.Code Regs., § 15125(a).)
  • A lead agency has discretion to depart from the “norm” of the “existing conditions” baseline, and to rely solely on a “future conditions” baseline (i.e., “conditions projected to exist absent the project at a date in the distant future”), but only if substantial evidence shows “departing from [the] norm [is] necessary to prevent misinforming or misleading the public and decision makers[.]”
  • Thus, while the Court rejected a per se rule prohibiting sole use of a future baseline (disapproving to that extent Sunnyvale West Neighborhood Assn. v. City of Sunnyvale City Council (2010) 190 Cal.App.4th 1351 and Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48), it also required that lead agencies using projected future conditions as the sole baseline show such analysis “is justified by unusual aspects of the project or the surrounding conditions.” It clarified this special justification was not required where the agency uses dual or multiple baselines in its analysis so long as one of them includes “the existing conditions analysis called for under the CEQA Guidelines.”
  • The Court distinguished and explained its own prior decision in Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310 (“CBE”), which addressed defining an existing conditions baseline where such conditions changed and fluctuated over time, and insisted that CEQA requires use of “a realistic baseline that will give the public and decision makers the most accurate picture practically possible of the project’s likely impacts” (citing CBE, 48 Cal.4th at 322, 325, 328); the Court stressed that it did not address in that case “either the propriety of using solely a future conditions baseline or the standard of review by which such a choice is to be judged” and its “holding that the analysis must measure impacts against actually existing conditions was in contrast to the use of hypothetical permitted conditions, not projected future conditions.”
  • The Supreme Court appeared to broaden the scope of the normally-required “existing conditions” baseline by noting “that in appropriate circumstances an existing conditions analysis may take account of environmental conditions that will exist when the project begins operations; the agency is not strictly limited to those prevailing during the period of EIR preparation. An agency may, where appropriate, adjust its existing conditions baseline to account for a major change in environmental conditions that is expected to occur before project implementation. In so adjusting its existing conditions baseline, an agency exercises it discretion on how best to define such a baseline under the circumstance of rapidly changing environmental conditions.” (Citing CBE, 48 Cal.4th at 328.)
  • In explaining the permissible “adjustment” of the “existing conditions” baseline by the lead agency, the Court introduced the new concept of a “date-of-implementation” baseline, stating “we find nothing [in CEQA] precluding an agency from employing, under appropriate factual circumstances, a baseline of conditions expected to obtain at the time the proposed project would go into operation.” As an example, the Court observed that “in an EIR for a new office building, the analysis of impacts on sunlight and views in the surrounding neighborhood might reasonably take account of a larger tower already under construction at the time of EIR preparation. For a large-scale transportation project like that at issue here, to the extent changing background conditions during the project’s lengthy approval and construction period are expected to affect the project’s likely impacts, the agency has discretion to consider those changing background conditions in formulating its analytical baseline.”

The Supreme Court’s decision provides needed guidance to lead agencies and CEQA practitioners in an area that had been rendered unclear by conflicting appellate decisions. Cautious land use attorneys had already been advising lead agencies’ EIR consultants not to rely solely on a future conditions baseline to the exclusion of an existing conditions baseline, even when such a baseline would more realistically measure the project’s impacts; the new decision confirms the wisdom of that advice, and that lead agencies may rely solely on a future conditions baseline, but only at their peril since doing so requires unusual circumstances and special justification. As the Supreme Court succinctly put it: “The question we would have an agency ask in choosing a baseline is not, “Would an existing conditions analysis add information to a future conditions analysis?” It is, “Do we have a reason to omit the existing conditions analysis and substitute one based on future conditions?”” The Court’s decision teaches that a sufficient reason for departing from the norm will likely be rare and unusual, existing only where substantial evidence shows “an existing conditions analysis would be misleading or without informational value.” While not an issue in the case before, the majority decision on the baseline issue was clearly driven by concerns that a less restrictive rule – i.e., simply allowing agencies to choose a baseline if supported by substantial evidence, as advocated by the three concurring and dissenting justices – could allow agencies to employ “gamesmanship” in selecting a future baseline to conceal significant nearer-term project impacts. By contrast, the dissent’s call for affording agencies greater leeway in choosing the baseline would grant more deference to certified EIRs and the agencies who design them, and the dissenting opinion expressed concerns that the majority’s rule is ambiguous, unnecessary, rewrites the CEQA Guidelines, and “adds a significant level of complexity and uncertainty to an already arduous environmental review process.”