CEQA's Substantive Mandate Clouded by Appellate Court

A California state court recently interpreted the California Environmental Quality Act (CEQA),¹ one of the strongest environmental statutes in the country, in a manner which apparently limits the utility of that statute as a powerful substantive tool for environmental protection.Like the National Environmental Policy Act (NEPA)² on which it is modeled, CEQA requires that an environmental impact report (EIR) be prepared for proposed government and government-licensed projects affecting the environment. A 1976 amendment³ added a substantive component to the state act which has no parallel in the federal statute, however. As amended, CEQA now declares that state agencies should not approve proposed projects "if there are feasible alternatives or feasible mitigation measures available which would substantially lessen the significant environmental effects" of the projects.

In Laurel Hills Homeowners Association v. City Council of Los Angeles,⁴ the California Court of Appeal ruled that this provision does not prevent an agency from approving a subdivision plan despite the existence of environmentally superior alternatives so long as mitigation measures are imposed that will reduce the adverse environmental effects of the proposal to an "acceptable" level.⁵ With the unanimous denial by the California Supreme Court of a petition for review,⁶ state agencies apparently now have discretion under CEQA as amended to choose to mitigate the environmental damage from a proposed project, stopping short, however, of avoiding completely the avoidable damage by adopting the environmentally preferable alternative, a degree of discretion that was not thought to exist under prior court decisions interpreting the Act.

Background

The California Environmental Quality Act was the first of numerous state progeny⁷ of the National Environmental Policy Act of 1969. As passed in August 1970, CEQA was similar in form and content to NEPA. It established as state policy the maintenance of environmental quality and directed state agencies to give "major consideration … to preventing environmental damage"⁸ and "to consider alternatives to proposed actions affecting the environment."⁹ To carry out this mandate, state agencies were directed to prepare an EIR closely paralleling the form of NEPA's environmental impact statement in connection with any proposal for state action that could have a significant effect on the environment.¹⁰ A significant requirement that went beyond NEPA's provisions was that the EIR discuss, in addition to alternatives to the proposed project, "mitigation measures proposed to minimize" the environmental impacts.¹¹

As with NEPA in its first year, CEQA's significance was unclear in the beginning.¹² The statute's importance was made manifest, however, by the California Supreme Court in Friends of Mammoth v. Board of Supervisors of Mono County¹³ in which it concluded that CEQA applied to government licensing of private actions. More significantly, the court went on to state that in enacting the law the California legislature intended CEQA "to be interpreted in such a manner as to afford the fullest [8 ELR 10209] possible protection to the environment within the reasonable scope of the statutory language."¹⁴ This statutory interpretation has been expanded by the lower courts into the general proposition that when state agencies are evaluating proposed projects they must give predominant weight to environmental values.¹⁵

A second landmark interpretation of CEQA was contained in footnote eight of the Friends of Mammoth opinion. In that footnote, the court reviewed the required components of an EIR in such a way as apparently to lay out a substantive rule for considering environmental factors in agency decision making:

Obviously if the adverse consequences to the environment can be mitigated, or if feasible alternatives are available, the proposed activity, such as the issuance of a permit, should not be approved.¹⁶

Amendments to CEQA

In 1976, the California legislature codified footnote eight by adding to CEQA a new section providing that "public agencies should not approve projects as proposed if there are feasible alternatives or feasible mitigation measures available which would substantially lessen the significant environmental effects of such projects."¹⁷ The amendment went beyond this declaration, however, to set up a balancing process to determine whether an environmentally harmful project can be approved while rejecting environmentally preferable alternatives and mitigation measures. Notwithstanding its significant adverse environmental impacts, an individual project may be approved if "specific economic, social, or other conditions make infeasible such project alternatives or such mitigation measures."¹⁸ Thus, in the balancing process, the first step is to identify the adverse environmental effects of the proposal. Second, the alternatives and possible mitigation measures must also be identified.¹⁹ Third, the feasibility of these possible alternatives and mitigation devices must be explored.²⁰ On the basis of this information, the agency must then determine what course to take, with rejection of environmentally superior alternatives or mitigation measures permissible only if they are determined to be infeasible in the light of specific conditions. Judicial interpretation of CEQA had arrived at essentially the same standard by holding that the benefits of a given proposal can only be weighed against the "unavoidable environmental risks," and that all adverse environmental effects are to be avoided if they can be.²¹

It is thus clear that, in order to comply with CEQA, agency decision makers must have before them a comprehensive EIR which identifies alternatives and mitigation measures, evaluates their feasibility, and analyzes in detail the conditions which would make any of them infeasible. The EIR must present concrete concepts²² and extensive data to support its conclusions as to feasibility²³ and must also be sufficiently comprehensive so that the identified alternatives and mitigation measures may be "thoroughly assessed" by the responsible state officials.²⁴

The Laurel Hills Decision

Laurel Hills Homeowners Association v. City Council of Los Angeles²⁵ concerned a proposal by a private developer to construct a 124-unit subdivision in a 126-acre scenic area of the Santa Monica Mountains. As the permit applicationwound its way through the city agencies, draft and final environmental impact reports were prepared which identified alternatives and mitigation measures that would lessen the adverse environmental effects of the development. A 63-unit plan aas specifically identified as environmentally superior to all alternatives under consideration. Although the feasibility of this alternative was not formally determined, the EIR raised doubts as to whether it was economically viable or politically acceptable, even though evidence in the EIR indicated that its adoption would still provide a healthy profit for the developer. In the final permit negotiations in late 1976, the developer and the city agreed on a 94-unit plan subject to the condition that most of the mitigation measures identified in the EIR, such as subdivision [8 ELR 10210] redesigning to minimize grading and to increase open space, be adopted. The city concluded that although the 94-unit project would have "some adverse environmental effects," the plan as adopted would ave a "net beneficial effect to the citizens of Los Angeles."²⁶

Homeowners and citizen groups in the area petitioned to invalidate the decision on the grounds that the city agency abused its discretion and violated CEQA in approving the project because the EIR identified feasible alternatives that would substantially lessen its adverse environmental effects. The trial court refused to invalidate the decision, holding that the city's statement of considerations justifying approval of the permit reflected its valid judgment that the social, economic, and environmental benefits of the adopted plan outweighed its environmental risks.²⁷

Court of Appeal Action

The petitioners took their case to the state Court of Appeal, emphasizing that pursuant to Friends of Mammoth CEQA was to be interpreted as requiring the city council to provide "the fullest possible protection to the environment within the reasonable scope of the statutory language," and that the city was therefore required under the 1976 amendments to select the environmentally superior alternative or to point to specific conditions that made that alternative infeasible in order to justify its rejection.

The appellate court essentially carved out an exception to the CEQA interpretation that the fullest environmental protection is the environmentally preferable alternative. The court agreed that CEQA's fundamental purpose is to prevent avoidable environmental damage, but it ruled that this can be accomplished "by the imposition of feasible mitigation measures alone,"²⁸ and that in such cases it is not necessary to go further and carefully scrutinize the feasibility of identified environmentally superior alternatives.

Because CEQA mentions alternatives and mitigation measures in the alternative rather than in the conjunctive, the court concluded that the agency had discretion to choose either method as long as the adverse environmental effects were substantially lessened. Were the provision read to require both devices, the court warned that "the fundamental purpose of CEQA would become the mandatory choice of the environmentally best feasible project."²⁹ Finding such an interpretation to go beyond both Friends of Mammoth and the 1976 amendments, the court introduced a new limiting concept into the goal of environmental protection embodied in CEQA: significant adverse environmental effects of a project must be reduced "to an acceptable level — that is, all avoidable significant damage to the environment has been eliminated and that which remains is otherwise acceptable."³⁰ The court did not define "acceptable," but by implication it must mean that the remaining adverse effects are acceptable to the decision-making agency within some standard of judicial review. Thus, if feasible mitigation measures alone can accomplish this limited goal, "CEQA does not mandate the choice of the environmentally best feasible project."³¹

The Court of Appeal supported its conclusions with the same Friends of Mammoth yardstick of "fullest possible protection … within the reasonable scope of the statutory language"³² cited by the petitioners. The court read the latter portion of this quotation to mean that there is some "acceptable" level of environmental damage which may be allowed to occur under CEQA. This interpretation slights the first of the quoted language, however, since "acceptable" damage is not necessarily consistent with "fullest possible protection," particularly where the identified environmentally preferable alternative provides a greater level of protection than do the feasible mitigation measures.

If, as the petitioners argued and the court held, the 1976 amendments were declaratory of preexisting law as expressed in Friends of Mammoth, that decision must be used to explain the meaning of the amendments. Friends of Mammoth indicated that the new CEQA provision should be read to require that either a preferable alternative or mitigation measures be chosen, whichever provides the "fullest possible protection," so long as the chosen method is feasible. If avoidable damage can be prevented by going beyond the mitigation measures to the original proposal by selecting the environmentally preferable alternative, as may be the case in most circumstances, this must be done. This is a far cry from the Laurel Hills court's holding that there is an undefined level of environmental damage which is per se acceptable and often reachable simply through mitigation devices, but below which state agencies need not reduce other avoidable effects through the choice of less environmentally harmful alternatives. The court relied on misreadings of Friends of Mammoth and CEQA to justify this interpretation, and its failure to cite any other authority leads to the disturbing conclusion that its interpretation is insupportable.³³

In addition to its substantive implication, the Laurel Hills decision mapped out new ground in interpreting CEQA's procedural dictates. On its face, CEQA requires identification of "specific conditions" rendering infeasible specific alternatives or mitigation measures,³⁴ but the EIR in this case failed to enumerate any "specific" reasons for rejecting the environmentally superior alternative. The court ruled that CEQA is satisfied with a specific feasibility finding as to only the particular project [8 ELR 10211] choice made by the agency as long as alternatives and mitigation measures are at least identified. By holding that the full evaluation of the feasibility of alternatives and mitigation measures was unnecessary, the court set a lower standard of comprehensiveness than the prior case law had indicated the statute required.³⁵ The bare identification of an environmentally preferable alternative without an evaluation of feasibility is nothing but an empty and illusory gesture.

Substantive Duty of Agencies

The most significant aspect of the Laurel Hills decision relates to the affirmative duty of agencies to lessen substantially the significant adverse environmental effects of proposed projects. This obligation is powerfully stated in the 1976 amendments to CEQA, and indeed exceed the substantive duty of federal agencies under NEPA.³⁶

Starting with Friends of Mammoth, judicial interpretation of CEQA has consistently emphasized that environmental values have the highest priority in agency decision making.³⁷ Thus, barring infeasibility due to specific conditions, agencies are expected to approve only those project plans which are tailored, either by mitigation measures or by the choice of the environmentally superior alternative, to do the least environmental damage, a principle which the 1976 CEQA amendments reinforced. Under the Laurel Hills court's interpretation, however, agencies are given great discretion to choose interchangeably among alternatives and mitigation measures so long as the adverse environmental effects are minimized to an "acceptable" level. The undefined notion of "acceptability" and the greater discretion it confers on state agencies when weighing the relative environmental costs of various proposals diminishes the strong judicial role traditionally played by the California courts in enforcing agency adherence to strict standards of environmental protection under CEQA. It also opens the door to subterfuge in the form of strawman proposals, which initially entail horrendous environmental impacts, that are whittled down to a modified plan with substantially diminished, and thus "acceptable," adverse impacts which the agency had in mind all along. As long as a substantial diminution of adverse effects was accomplished, serious consideration, let alone selection, of the environmentally best alternative and thus a better overall plan would, in the words of the California Court of Appeal, "be unnecessary."

Under CEQA, state agencies have discretion to approve proposals despite expected significant adverse environmental effects, but the process of approval is carefully circumscribed by the requirement for specific findings that environmentally preferable alternatives are infeasible. Inferentially, this is a directive to choose the least damaging alternative, so long as it is feasible. Laurel Hills suggests as a new standard the "acceptability" of the remaining adverse effects once mitigation measures have been imposed on the project as presently planned, a principle that appears nowhere in the statute and is not derived from the case law. This inherently subjective standard is an especially unpalatable dilution of CEQA's mandate in that it apparently allows an agency to approve a project with mitigation measures which bring it just under a tolerable ceiling on environmental damage even though the EIR identifies alternatives that would minimize adverse environmental effects to a much greater degree. A reviewing court can determine with little difficulty whether potential adverse effects have been "substantially lessened" so as to provide the "fullest possible protection" to the environment, but it will be hard pressed to review an agency's conclusion that such impacts have been reduced to an "acceptable level."

Conclusion

The California Supreme Court's refusal to review the Laurel Hills decision leaves in place a judicial departure from previous interpretations of CEQA that undercuts the continued efficacy of that statute as a strong substantive tool for environmental protection in California. The Court of Appeal allowed a public agency to disregard the CEQA prohibition against approval of a project if there is an identified alternative that will have substantially diminished adverse effects than the approved plan. Upholding the city's conclusion that there was a "net beneficial effect" in the final subdivision plan demeaned the statutory directive that protection of the environment is the essential ingredient in agency decision making. There may well still have been a net beneficial effect if the environmentally superior alternative had been chosen, but the agency failed even to inquire into the feasibility of that alternative. Had the alternative been found infeasible for economic reasons, reliance on the mitigation measures alone would have been justified. If the environmentally superior alternative had been found feasible, however, the statute would seem to require that it be adopted. To follow this course is squarely "within the reasonable scope of the statutory language" and would provide "the fullest possible protection to the environment," the seminal CEQA mandate as interpreted by the California Supreme Court in Friends of Mammoth. The Laurel Hills decision represents a regrettable retreat from this position which state agencies may use to justify demoting environmental considerations to being only one of many factors in the decision-making process. Courts may also see it as a justification for refusing to interfere with agency approvals of projects if the remaining environmental damage has been found "acceptable," even though further substantial lessening is possible. The Supreme Court's puzzling refusal to review the case and clarify its own position in this matter will only contribute to the confusion raised by Laurel Hills and thereby undercut the vigorous implementation of CEQA.

1. CAL. PUB. RES. CODE §§ 21000-21176 (West 1977).

2. 42 U.S.C. §§ 4321-4361, ELR STAT. & REG. 41009.

3. New § 21002 reads as follows:

The Legislature finds and declares that it is the policy of the state that public agencies should not approve projects as proposed if there are feasible alernatives or feasible mitigation measures available which would substantially lessen the significant environmental effects of such projects, and that the procedures required by this division are intended to assist public agencies in systematically identifying both the significant effects of proposed projects and the feasible alternatives or feasible mitigation measures which will avoid or substantially lessen such significant effects. The Legislature further finds and declares that in the event specific economic, social, or other conditions make infeasible such project alternatives or such mitigation measures, individual projects may be approved in spite of one of more significant effects thereof.

New § 21002.1 reads as follows:

In order to achieve the objectives set forth in Section 21002, the Legislative finds and declares that the following policy shall apply to the use of environmental impact reports prepared pursuant to the provisions of this division:

(a) The purpose of an environmental impact report is to identify the significant effects of a project on the environment, to identify alternatives to the project, and to indicate the manner in which such significant effects can be mitigated or avoided.

(b) Each public agency shall mitigate or avoid the significant effects on the environment of projects it approves or carries out whenever it is feasible to do so.

(c) In the event that economic, social, or other conditions make it infeasible to mitigate one or more significant effects of a project on the environment, such project may nonetheless be approved or carried out at the discretion of a public agency, provided that the project is otherwise permissible under applicable laws and regulations….

4. 147 Cal. Rptr. 842, 8 ELR 20714 (Ct. App. 2d Dist. Aug. 3, 1978).

5. 147 Cal. Rptr. at 846, 8 ELR at 20715.

6. On September 27, 1978, the California Supreme Court unanimously denied a Petition for Hearing to review the Court of Appeal decision.

7. See W. RODGERS, ENVIRONMENTAL LAW 809-22 (1977); Yost, NEPA's Progeny: State Environmental Policy Acts, 3 ELR 50090 (1973).

8. CAL. PUB. RES. CODE § 21000(g).

9. CAL. PUB. RES. CODE § 21001(g).

10. CAL. PUB. RES. CODE § 21100.

11. CAL. PUB. RES. CODE § 21100(c).

12. See Pridgeon, Anderson & Delphey, State Environmental Policy Acts: A Survey of Recent Developments, 2 HARV. ENV'TL L. REV. 419, 421 (1977).

13. 8 Cal. 3d 247, 502 P.2d 1049, 104 Cal. Rptr. 761, 2 ELR 20673 (1972).

14. 8 Cal. 3d at 259, 2 ELR at 20675.

15. For example, in San Francisco Ecology Center v. City & County of San Francisco, 48 Cal. App. 3d 584, 122 Cal. Rptr. 100 (Ct. App. 1st Dist. 1975), the court said that "environmental values are to be assigned greater weight than the needs of economic growth." 48 Cal. App. 3d at 592, 122 Cal. Rptr. at 104. See also County of Inyo v. City of Los Angeles, 71 Cal. App. 3d 185, 139 Cal. Rptr. 396, 7 ELR 20583 (Ct. App. 3d Dist. 1977).

16. 8 Cal. 3d at 263 n.8, 2 ELR at 20676 n.8.

17. CAL. PUB. RES. CODE § 21002. In enacting this provision, the legislature expressly declined to make a finding as to whether it was codifying preexisting law, i.e., whether the footnote eight in Friends of Mammoth now carried the force of statutory rather than judge-made law. In Laurel Hills, the respondents argued that it did not because the agency proceedings were completed before the 1976 CEQA amendments took effect. The Court of Appeal in Laurel Hills affirmed the trial court's holding that § 21002 was declaratory of preexisting law and thus applicable to the challenged agency action.

18. CAL. PUB. RES. CODE § 21002. See also § 21002.1(c).

19. CAL. PUB. RES. CODE § 21002.1(a).

20. "Feasibility" is defined in the 1976 amendments to CEQA as whether the project can be "accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, social, and technological factors." CAL. PUB. RES. CODE § 21061.1. Feasibility must be determined because a public agency "shall mitigate or avoid the significant effects on the environment of projects it approves or carries out whenever it is feasible to do so." § 21002.1(b).

21. See County of Inyo, 7 ELR at 20584, and San Francisco Ecology Center, 122 Cal. Rptr. at 103.

22. "In making these determinations [whether feasible mitigation measures or alternatives exist to counter adverse environmental effects] concrete concepts, not mere aphorisms or generalities, must be considered." Friends of Mammoth, 8 Cal. 3d at 263 n.8, 2 ELR at 20676 n.8.

23. See County of Inyo, 7 ELR at 20587; Burger v. County of Mendocino, 45 Cal. App. 3d 322, 119 Cal. Rptr. 568 (Ct. App. 1st Dist. 1975).

24. See Wildlife Alive v. Chickering, 18 Cal. 3d 190, 132 Cal. Rptr. 377, 553 P.2d 537, 6 ELR 20748 (1976); City of Coronado v. California Coastal Zone Conservation Comm'n, 69 Cal. App. 3d 570, 138 Cal. Rptr. 421 (Ct. App. 4th Dist. 1977).

25. 147 Cal. Rptr. 842, 8 ELR 20714 (Ct. App. 2d Dist. Aug. 3, 1978).

26. 147 Cal. Rptr. at 848, 8 ELR 20716.

27. Id.

28. 147 Cal. Rptr. at 845, 8 ELR at 20715.

29. 147 Cal. Rptr. at 846, 8 ELR at 20715.

30. Id.

31. Id.

32. See note 14 supra.

33. The Deputy California Attorney General in charge of the Environmental Unit at the time of passage of the 1976 amendments to CEQA recently noted that "[o]f course mitigation should not preclude consideration of the environmentally feasible alternative." He noted that there is no legislative history of this part of the 1976 amendments "because I don't believe anybody involved ever thought somebody would come up with the construction" of the statute adopted by the Court of Appeal. Letter from Nicholas C. Yost to Antonio Rossmann (Sept. 3, 1978) (copy on file at the Environmental Law Reporter).

34. CAL. PUB. RES. CODE § 21002.

35. See notes 21 and 22 supra.

36. The view is widely held that NEPA imposes a lesser substantive duty to protect the environment. See generally RODGERS, supra note 7 at 738-50.

37. See discussion and cases cited at note 15.