AB 1633: CEQA Reform by Leveraging the Housing Accountability Act

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On October 11, 2023, Governor Newsom signed into law AB 1633, an innovative bill that gives the developer of a qualified infill project the ability to challenge a local government’s decision to deny the use of an exemption under the California Environmental Quality Act (“CEQA”) or to require further environmental analysis rather than adopt or certify the CEQA document.  Although limited to these specific decisions under CEQA and to projects meeting detailed criteria, this is the first legislation to expressly authorize a developer to challenge the manner in which a local government processed a CEQA determination.

The genesis of AB 1633 lies in a 2021 decision by the San Francisco Board of Supervisors to require additional CEQA review rather than certify an environmental impact report (“EIR”) for a 495-unit residential project proposed on a parking lot at 469 Stevenson Street.  After the planning commission certified the EIR and approved the project, the Board required additional environmental studies, citing unsubstantiated concerns about gentrification, seismic issues, and shadow impacts on historic resources.  The developer sued, claiming that the Board’s action was an “effective denial” under the Housing Accountability Act (“HAA”).  A court upheld the Board’s decision by concluding that the HAA could not apply until after the EIR was certified.  AB 1633 was introduced to address this form of CEQA abuse by authorizing a developer to sue a local agency that requires further study of a mitigated negative declaration (“MND”), EIR, or other CEQA document that satisfies the requirements of CEQA.

AB 1633 also gives the developer of a qualified residential project the right to challenge in court a local agency that determines incorrectly that a project is ineligible for an exemption under CEQA.  For example, a developer applying for entitlements may believe that the project is eligible for an exemption from CEQA, only for the local agency to take a more conservative approach and require an MND or even an EIR. 

Rather than amend CEQA, AB 1633 uses the HAA to create rights for the developer to challenge these CEQA decisions.  Currently, the HAA prohibits a local agency from "disapproving" a housing development project in two scenarios:  disapproving the land use entitlements and failing to comply with time periods in the Permit Streamlining Act.  AB 1633 adds two new categories of "disapproval" of a housing development project that address the situations involving CEQA described above.  

Required Showing.    To challenge a local agency decision under AB 1633, the applicant must make a specific showing based on “substantial evidence in the record.”

Exemption.  With respect to an exemption, the showing is relatively straightforward.  If the local agency fails to make a determination that the project is exempt, the applicant must show that (i) the housing development project is eligible for an exemption sought by the applicant, and (ii) in the case of a categorical exemption in the CEQA Guidelines, the exemption is not barred by one of the exceptions set forth in Section 15300.2 of the Guidelines.

MND, EIR or Other CEQA Document.  In the case of local agency’s failure to adopt an MND or certify an EIR, the required showing is more complicated.  The applicant must show that (i) a negative declaration, addendum, environmental impact report, or other CEQA document that satisfies the requirements of CEQA has been prepared and was presented to the local agency at a meeting for its adoption, approval or certification, and (ii) the agency either (a) failed to decide whether to require further study or to adopt, approve, or certify the environmental document, or (b) committed an “abuse of discretion.” 

Abuse of Discretion as to an MND.  For an MND, an abuse of discretion occurs if the local agency decides to require further environmental study rather than adopt the MND and it acts “in bad faith” or without substantial evidence “to support a fair argument that further environmental study is necessary . . .”  The HAA defines “bad faith” to mean “an action that is frivolous or otherwise entirely without merit.”

Abuse of Discretion as to an EIR, Addendum and Other CEQA DocumentsIn the case of an EIR, addendum or other CEQA document, an abuse of discretion occurs if the local agency decides to require further environmental study rather than certify, adopt or approve the CEQA document and the agency acted “in bad faith” or without substantial evidence “that further environmental study is legally required” to analyze potentially significant environmental impacts. 

HAA Remedies.  By including these “disapprovals” in the HAA, the applicant has a statutory right to file a lawsuit under the HAA to enforce its rights.  In addition, the HAA makes extensive remedies available to a successful plaintiff, including, a court order to comply with HAA, attorneys’ fees and fines imposed against the local agency, and other remedies.  However, AB 1633 prohibits an attorneys’ fee award if the court finds that the local agency “acted in good faith and had reasonable cause to disapprove the housing development project due to the existence of a controlling question of law about” CEQA or “a substantial ground for difference of opinion” regarding the CEQA Guidelines. 

Project Requirements.  AB 1633 is limited to projects that meet a lengthy list of qualifications.  Unlike other recent laws that compel local governments to approve residential development, AB 1633 does not require the project to include affordable units, pay prevailing wages or comply with other construction labor standards.  To qualify for the benefits of AB 1633, the project must satisfy the following conditions:   

(i) the project must be a “housing development project” (meaning it consists of residential units only, mixed-use with at least two-thirds of the floor area designated for residential use, or transitional or supportive housing) with density of at least 15 dwelling units per acre;

(ii)  the project may not be located on a site meeting any of ten environmental sensitivity criteria incorporated from SB 35 (i.e., within the coastal zone, on prime farmland or farmland of statewide importance, within a wetland, on a hazardous waste site, in an earthquake fault zone, in a special flood hazard area, in a regulatory floodway, on land identified for conservation or under a conservation easement, or on habitat for protected species);

(ii) the site cannot be in a high or very high fire hazard severity zone; and

(iii) the project site must be on a legal parcel within an urbanized area and meeting one or more of the following infill development criteria:

  1. within one-half mile walking distance to a high-quality transit corridor (i.e., a bus route with a frequency of service interval of 15 minutes or less during peak periods) or a major transit stop (i.e., a rail, bus rapid transit or ferry station, or the intersection of two bus routes with a frequency of service interval of 15 minutes or less during peak periods);
  2. in a very low vehicle travel area (defined as an urbanized area, as designated by the United States Census Bureau, where the existing residential development generates vehicle miles traveled per capita that is below 85 percent of either regional vehicle miles traveled per capita or city vehicle miles traveled per capita);
  3. developed with urban uses that adjoin at least 75% of the perimeter of the site or at least three sides of a four-sided project site (parcels separated only by a street or highway are considered adjoined); or
  4. proximal to six or more specified amenities, meaning (i) within one-half mile of a bus station or ferry terminal, or (ii) within one mile, or for a parcel in a rural area (as defined), within two miles, of a supermarket or grocery store, public park, community center, pharmacy or drug store, medical clinic or hospital, public library, or school that maintains a kindergarten or any of grades 1 to 12, inclusive. 

Procedural Requirements.  To exercise rights under AB 1633, the applicant must first give timely written notice to the agency of the action or inaction the applicant believes constitutes a disapproval and the local agency must fail to make a correct determination within 90 days of the written notice. The local agency may extend the 90-day timeframe by up to 90 additional days if an extension is necessary to determine whether there is substantial evidence in the record to support the applicant’s contention.

AB 1633 goes into effect on January 1, 2024.

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