Little Hoover Commission Recommends Significant CEQA Reform

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Reforming California’s venerable California Environmental Quality Act (CEQA) is a politically charged topic. Over the years, the Legislature has made many incremental changes to CEQA but has not enacted far-reaching reforms in its administrative or litigation process. 

Recently, the state’s Little Hoover Commission exerted considerable effort thinking about the effect of CEQA compliance and litigation on development projects, particularly housing projects.  The Little Hoover Commission is an independent state oversight agency with a bipartisan board composed of five public members appointed by the governor, four public members appointed by the Legislature, two senators and two assemblymembers.  The purpose of the Commission is to promote “economy, efficiency and improved services in the transaction of the public business in the various departments, agencies and instrumentalities of the executive branch of the state government.”

Beginning in March of 2023, the Commission held five hearings on CEQA, soliciting testimony from 24 invited witnesses and heard public comment from many additional stakeholders.  The result of the Commission’s work is its May 2024 report, “CEQA: Targeted Reforms for California’s Core Environmental Law.”  This is the Commission’s first look at CEQA reform in almost three decades, since its November 1995 report “Making Land Use Work:  Rules to Reach Our Goals.” The Commission’s most recent report provides six recommendations for CEQA reform that, if adopted, would reduce CEQA abuse, and five study proposals that should be further explored.

Recommendations for CEQA Reform

1. Strengthen Standing Requirements to Sue Under CEQA

CEQA has an unusually broad threshold for establishing a plaintiff’s right to sue, referred to as “standing.”  To limit a plaintiff’s ability to use CEQA for pursuing goals that have little to no relationship to environmental protection, such as efforts to preclude development because it is “out of character,” to target competing businesses, or to ensure that certain labor standards are used, the Commission recommends strengthen standing requirements.  Specifically, the Commission recommends importing into CEQA the same standing requirements that apply to the federal environmental review statute, the National Environmental Policy Act (NEPA).  Under NEPA, the test for standing is referred to as the “zone of interest” test, which constitutes a much narrower pool of would-be plaintiffs.

2. Address “Data Dumps” and “Late Hits”

Currently, CEQA allows for new information to be included in the lead agency’s record at any time during the CEQA process, including after the close of the public comment period.  As a result, project opponents often wait until the final public hearing on a project to raise concerns, sometimes submitting a huge volume of documents at the last minute.  These last-minute abuses of the process are colloquially referred to as “late hits” and “data dumps.”  The Commission recommends changes to CEQA that would limit the submission of input during the environmental review process to established public comment periods, and to clarify that lead agencies are not required to consider information submitted after the end of the public comment period absent a showing that the information could not have been submitted earlier in the process.

3. Create a Broad, Simplified Exemption for Infill Housing

CEQA includes certain exemptions intended to streamline review for infill housing.  Those exemptions, however, are heavily qualified and conditioned, such that many infill projects have difficulty qualifying for the exemptions.  The Commission recommends that all infill housing be exempt from CEQA review, without additional conditions or qualifications.  The Commission suggests that for purposes of this exemption, infill housing should be understood as that which is developed on sites that are at least three quarters surrounded by existing urban uses, and the exemption would apply both in cities and in urbanized, non-incorporated areas.

4. Provide for Additional Judicial Training

Because of CEQA’s complexities and level of specialization, the Commission recommends the state provide additional funding to extend CEQA training for judges from two days to a full week.

5. Request Courts to Show Greater Deference to the Statute and CEQA Guidelines

The Commission notes Public Resources Code Section 21083.1 expresses the legislative intent that courts not interpret CEQA in a manner that “imposes procedural or substantive requirements beyond those explicitly stated.”  But because of the absence of clear parameters and bright lines, there has nonetheless been substantial judicial interpretation of both CEQA and the CEQA Guidelines.  The Commission recommends that the Legislature should reaffirm the language in Section 21083.1 that courts should defer to the procedural and substantive requirements established in the statute and the Guidelines.  (Section 21083.1 was initially drafted by Michael Zischke and included in a 1993 CEQA bill sponsored by Senator Quentin Kopp.)

6. Provide Clearer Parameters and Guidance for Significance Thresholds and Mitigations

The Commission recommends that the governor and Legislature establish clear parameters for significant thresholds and for analysis and mitigation of impacts, beginning with the impact categories most subject to litigation. The Commission recommends that the Governor’s Office of Planning and Research (OPR) initiate this process by identifying statutory changes that could provide definitive guidance.  These parameters and guidance should carry the presumption that if a lead agency follows these parameters and approaches, then their approach will not be subject to legal challenge.

Recommended Study Proposals for CEQA Reform

In addition to recommending the adoption of the above six CEQA reforms, the Commission recommended further study of several issues that are often raised as CEQA areas ripe for reform.

1. CEQA Courts

Recognizing the specialized knowledge often needed to evaluate CEQA claims and unpredictability of judicial outcomes, the Commission recommends that the Legislature study the need for, and workability of, separate CEQA courts, considering the degree to which a CEQA court would create more predictability and certainty in CEQA cases. 

2. Document Translation

Currently, there is no requirement for the translation of CEQA documents.  Given the size and diversity of the state’s population, the Commission recommends that the Legislature require a study of the costs and benefits associated with translating CEQA documents.

3. Bonding Requirements for Plaintiffs

The Commission acknowledges that some CEQA practitioners recommend strengthening and expanding existing statutory provisions that aim to discourage bad-faith litigation by requiring the posting of a bond for CEQA lawsuits.  There are existing models for such bonding mechanisms, such as the bond requirement in Section 529.2 of the Code of Civil Procedures, which allows developers of low- and moderate-income housing projects to require a plaintiff to post a bond of up to $500,000 for damages suffered as a result of delays to a project.  The Commission recommends further study of establishing bonding requirements such as these for CEQA plaintiffs.

4. Review the Effects of SB 743/Vehicle Miles Traveled Analysis

To reduce car-related greenhouse gas emissions, the Legislature in 2013 passed SB 743, which changed how transportation impacts are evaluated under CEQA, moving from an analysis of how projects will affect traffic congestion to analyzing how they will impact vehicle miles traveled (VMT).  The Commission recommends a study on the initial implementation of VMT requirements, reporting on the effects of VMT analysis, the effectiveness and cost of VMT mitigation, how different geographies have experienced VMT implementation, and whether it is reasonable to continue to require statewide implementation of VMT requirements.

5. Locking in Models

CEQA requires lead agencies to use the most up-to-date significance thresholds and analytical models available.  The Commission notes that the release of new regulatory standards during the review process “can force projects to throw out existing analysis and start over,” which is particularly troublesome for those projects that are caught up in lengthy litigation and at risk of descending into a “CEQA infinite loop.”  The Commission recommends that a study to examine the benefits and drawbacks of some reasonable period during which project review and litigation could proceed to completion regardless of new modeling that might emerge.

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As with all report and studies, the real measure of success will be the extent the Legislature implements its recommendations and suggestions.  Given the state’s current focus on solving the housing supply crisis, in part by streamlining land use and environmental review processes, there may be sufficient political will to enact at least some of these reforms.

A copy of this new report is available HEREIf you have questions regarding these recommendations and study proposals, please feel free to contact Michael Zischke (mzischke@coxcastle.com), Linda Klein (lklein@coxcastle.com), Scott Birkey (sbirkey@coxcastle.com), or any other attorney in Cox Castle’s land use practice group.

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