Job Killer Could Enact Significant Barrier to Housing and Development

The Senate Appropriations Committee today will consider a California Chamber of Commerce-opposed job killer that could create barriers to housing and economic development.

SB 224 (Jackson; D-Santa Barbara) directs the Office of Planning and Research (OPR) to amend the California Environmental Quality Act (CEQA) Guidelines to redefine CEQA law regarding baseline physical conditions by which a lead agency determines whether a project has a significant effect on the environment, which must be certified and adopted by the Secretary of the Natural Resources Agency upon receipt and review.

The bill contains a statutory directive to OPR to limit the consideration of modifications to the environment at the project site caused by actions taken without an environmental review under certain circumstances and actions that were unpermitted or illegal at the time the action was undertaken.

While the SB 224 Fact Sheet indicates an intent to curb actions by bad actors who “have discovered that they can lessen the perceived impact of a proposed project or activity by altering the environment before starting the CEQA process,” it is important to consider the unintended consequences to all other developments in California (including those proposed by California agencies)—especially given the unprecedented housing crisis faced in the state.

Additional Guidelines Unnecessary

As the supporters noted in previous committee testimony, existing case law (including cases by the California Supreme Court) generally requires agencies to establish the baseline at existing environmental conditions when evaluating the impacts of a project, except when the existing conditions provide a misleading impression of project impacts. The issue SB 224 seeks to address is the concern that agencies sometimes use illegal or unpermitted activities by bad-actor applicants as the baseline, despite the California Supreme Court’s directive regarding misleading uses of the baseline. In the few instances where this occurs, a remedy already exists.

When a person legitimately believes a lead agency used a misleading baseline to perform the CEQA analysis, he/she may challenge the CEQA document/findings under existing litigation provisions.

It is unnecessary to upend established CEQA foundations that apply to all projects and to create uncertainty about mitigation requirements for applicants who did not undertake any illegal or unpermitted activities. California has a whole suite of enforcement statutes under environmental laws to hold bad actors accountable for their actions.

SB 224 Will Have Unintended Consequences on Good Actors and Negative Impact on Development

As a practical matter, SB 224 would result in serious and unacceptable consequences, including:

  • SB 224 Would Undermine Urban Economic Development: California has long recognized that redeveloping urban properties, including brownfields, is critical to meeting the state’s environmental and economic goals. Redevelopment creates economic activity on previously unavailable land, while taking development pressures off undeveloped open land, with the dual benefit of cleaning up contaminated properties and making them economically productive.California also has a robust legal framework to ensure that responsible parties remedy and retain liability for sites that either are contaminated or have unpermitted structures or facilities. These current laws are sufficient to ensure that new development on these sites does not carry forward the harms caused by previous owners or uses.Whether by statute or by CEQA Guideline, SB 224 seeks to require redundant and unnecessary responsibilities to remedy previous illegal or harmful activities—and imposes these new and expensive responsibilities under CEQA onto new developers. By requiring that developers of new projects mitigate for past activities on a site, for which the owner/developer has no responsibility or liability, SB 224 would create a huge disincentive for new urban redevelopment. SB 224 contradicts longstanding CEQA law which states clearly that projects are required to mitigate only the impacts they impose on the environment. The result of SB 224 will be to enact redundant requirements that significantly expand environmental review and mitigation costs under CEQA and deter redevelopment across the state.
  • SB 224 Dramatically Expands CEQA and Enacts a Significant Barrier to New Infill Housing: A fundamental tenet of California’s environmental and climate policy is the need to promote infill housing. SB 224 seeks to direct OPR to undertake a dramatic expansion of CEQA to require new infill housing to mitigate not only for its impacts, but also to remedy past activities for which California law already assigns liability. Under SB 224, infill housing project applicants could be forced to absorb excessive mitigation costs for impacts that may have existed for decades.These new cost obligations could be imposed even if the project was minor in scope and qualified for a Categorical Exemption or Mitigated Negative Declaration under CEQA. In fact, the ability of project proponents to utilize categorical exemptions or mitigated negative declarations would be entirely prohibited in certain instances, thus requiring full environmental impact reports solely to address already-existing baseline conditions. This outcome would undermine the original intent of CEQA to address the environmental consequences of new projects, not conditions that would continue to exist regardless of whether the project is approved. Furthermore, SB 224 would invite new legal challenges on whether prior environmental reviews were sufficient regarding baseline conditions. The combined result of these impacts would be to add substantial mitigation costs and delays to infill housing project permitting and land use planning under CEQA.
  • SB 224 Contradicts Longstanding Constitutionally Based CEQA Law: Both the CEQA Guidelines and California and federal case law state clearly that a lead agency has the authority “to require feasible changes in any or all activities involved in the project in order to substantially lessen or avoid significant effects on the environment.” However, such mitigation must be consistent with applicable constitutional requirements such as “nexus” and “rough proportionality.”SB 224 directly conflicts with these high court judgments by requiring a project applicant to undertake mitigation that is entirely unrelated to the impacts of its project.

Businesses thrive on certainty. SB 224 would create substantial uncertainty about the foundational tenet of CEQA—the baseline. This uncertainty will certainly dissuade developers from moving forward with projects during the “multi-year” process envisioned by SB 224. That, coupled with the statutory directive to OPR (which could require an applicant to mitigate impacts arising from prior illegal, unpermitted, or emergency activities for which the applicant had no responsibility) and the potential for additional legal challenges will have a negative impact on development in California. This could not come at a worse time.