This morning, a unanimous California Supreme Court reaffirmed that environmental analysis under the California Environmental Quality Act (CEQA) should be concerned with a project's impact on the environment, not the environment's impact on a project. The decision in California Building Industry Association (CBIA) v. Bay Area Air Quality Management District (BAAQMD) (Case No. S213478) held that CEQA does not generally require an analysis of the impacts of existing environmental conditions on a project's future residents and/or receptors. The Court determined that an analysis of the impacts of the environment on a project—known as "CEQA-in-reverse"—is only required in two limited sets of circumstances: first, when a statute provides an express legislative directive to consider such impacts, and second, when a proposed project risks exacerbating environmental hazards or conditions that already exist.

The case had been pending before the California Supreme Court for more than two years, and presented an issue fundamental to the scope and nature of CEQA analysis. The decision today likely comes as a relief to many project proponents, given that the Court expressly declined to expand the nature of analysis required under CEQA.

In the CBIA case, the Court considered only the narrow question: "Under what circumstances, if any, does the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) require an analysis of how existing environmental conditions will impact future residents or users (receptors) of a proposed project?" Stated another way, the question was whether CEQA applied "in reverse" such that in addition to mandating analysis and mitigation of impacts of a project on the environment, it also mandates analysis and mitigation of the impacts of the environment on a project.

In the underlying matter, the Bay Area Air Quality Management District had adopted new CEQA thresholds of significance for air pollutants, including new "receptor thresholds" for toxic air contaminants and new thresholds for greenhouse gases and certain particulate matter. The CBIA challenged these thresholds on a variety of grounds, including that the receptor thresholds were invalid because CEQA does not require analysis of the impacts that existing hazardous conditions will have on a new project's occupants.

The Court analyzed the question generally as a matter of statutory interpretation – with only passing reference to the underlying facts of the case that brought the issue to the Court's attention, and almost no discussion of the previous case law. The Court stepped through a statutory analysis of CEQA and the CEQA Guidelines, ultimately finding that Section 15126.2(a) of the Guidelines provided a clear answer to the question presented. That Guideline in general requires an evaluation of environmental conditions and hazards existing on a project site if such conditions and hazards may cause substantial adverse impacts to future residents or users of a project.

Interestingly, the Court left the door open to the inclusion of CEQA-in-reverse analysis in future environmental documents. The Court noted that while such analysis is not generally required, CEQA does not prohibit an agency from considering how existing conditions might impact a project's future users or residents.

The decision is sensible in that it reaffirms what we have long believed the general rule to be: CEQA analysis is concerned with a project's impact on the environment, not the environment's impact on a project. From an environmental review perspective, it maintains the status quo and we do not anticipate any significant change in the way CEQA documents are processed or CEQA impacts are analyzed.