Rejecting Sunnyvale West, the Second District Court of Appeal Affirms Agency’s Discretion to Use a “Future Conditions Baseline” for CEQA Analysis of Traffic, Air Quality and Greenhouse Gas Impacts

Just over a year ago, the Sixth District Court of Appeal sparked controversy when it ruled, in Sunnyvale West Neighborhood Assn. v. City of Sunnyvale City Council (2010) 190 Cal.App.4th 1351 (“Sunnyvale West”), that CEQA requires as a matter of law that environmental impacts of a proposed project to be analyzed in comparison to “baseline” environmental conditions as they existed at or before project approval.  The Fifth District Court of Appeal subsequently adopted this rule in Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48 (“Madera Oversight Coalition”).  Then, in Pfeiffer v. City of Sunnyvale (2011) 200 Cal.App.4th 1552, the Sixth District loosened its application of the rule of Sunnyvale West, and held that agencies have discretion to analyze project impacts against a baseline of conditions anticipated to exist in the future, if that baseline is supported by substantial evidence. 

Now, another appellate district has weighed in, with a decision that “fundamentally” disagrees with the rule of Sunnyvale West and Madera Oversight Coalition.  In Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (2012) __ Cal.App.4th __ (April 17, 2012), the Second District Court of Appeal has ruled that an agency not only has discretion to compare project impacts to a future conditions baseline, but that for at least some types of impacts, comparison against a pre-project approval baseline may be incorrect under CEQA.  The Court held that for projects whose impacts will be experienced over a long time period, a future baseline is appropriate if future conditions can be accurately projected based on substantial evidence, and if comparison to future conditions would provide the most realistic picture of how impacts will be felt when they actually occur. 

With the publication of Neighbors for Smart Rail, there are now four decisions in three different appellate districts offering multiple interpretations of what baselines may (and may not) be used to assess traffic, air quality and greenhouse gas impacts.  These cases illustrate the high stakes for public agencies and developers alike in this increasingly confusing and complicated area of law.  Using the wrong baseline can jeopardize the legal adequacy of an EIR and result in the invalidation of project approvals.  Public agencies and developers are therefore encouraged to seek legal advice and give careful consideration to what baseline should be used in environmental review, particularly of projects that will have impacts over a long term of years.

In Neighbors for Smart Rail, the petitioners challenged an EIR for a light rail transit project connecting downtown Los Angeles to Santa Monica.  Among other claims, the petitioners argued that the EIR improperly used a “future” baseline for analyzing traffic, air quality and greenhouse gas emissions impacts.  In analyzing these impacts, the EIR compared anticipated future conditions under the project to a “future conditions” baseline that described traffic and air quality levels projected to occur by 2030, the year by which the project would be fully operational.  Relying upon the rule announced in Sunnyvale West and affirmed in Madera Oversight Coalition, the petitioners argued that the EIR failed to proceed as required by law by failing compare the project’s traffic, air quality, and greenhouse gas emissions impacts against a baseline of conditions that existed prior to project approval.  Rejecting that argument, the Court relied upon CEQA Guidelines § 15125(a) and Supreme Court precedent to hold that agencies are not inflexibly required to use an existing conditions baseline. 

The Court ruled that, for a project which will not achieve full operation until some years after agency approval, comparison of the project’s impacts against a future baseline represents a “realistic and rational decision” that is well suited to realistically measuring the significance of the impacts of the project at the time they will be fully felt.  In such cases, using a future baseline furthers CEQA’s objectives to promote disclosure and informed decision-making.   The Court thus concluded that “in a proper case, and when supported by substantial evidence, use of projected conditions may be an appropriate way to measure the environmental impacts that a project will have on traffic, air quality and greenhouse gas emissions.”  What matters is “the reliability of the projections and the inevitability of the changes on which those projections are based.”  Finding the use of 2030 traffic, air quality, and greenhouse gas projections to be supported by both “substantial evidence and common sense,” the Court determined the EIR to be adequate under CEQA. 

In so holding, the Court firmly rejected Sunnyvale’s conclusion that CEQA requires the significance of an impact to be measured against a baseline of conditions existing either at the time a notice of preparation is issued, or at the latest, when the project is approved, finding that “neither the language nor the purpose of [CEQA] requires that conclusion in every case.”  Indeed, the Court went so far find Sunnyvale’s reasoning and conclusions to be “erroneous” and lacking a rational basis.  As the Court observed, using an existing conditions baseline to analyze the impacts of a long-term project rests on the false hypothesis that the environment will remain the same 20 years later when the project comes on line.  Thus, for long-term projects, using an existing conditions baseline would be unrealistic and yield “no practical information” to decision makers or the public.  The Court thereby suggested that for long-term infrastructure projects that will not come on line for many years, using an existing conditions baseline alone may not satisfy CEQA’s information disclosure purposes. 

There are now four published decisions in three different appellate districts offering multiple interpretations of what baseline may (and may not) be used in preparing legally defensible CEQA documents.  The issue is primed for Supreme Court review.  For now, however, these conflicting decisions leave public agencies and developers in a state of uncertainty and confusion as to what a legally defensible CEQA document requires.  Given the risk of project invalidation if a court determines that the wrong baseline was used, public agencies and developers are encouraged to seek legal advice, especially for infrastructure and other kinds of long-term projects, and pay careful attention to this evolving area of law.