Latham & Watkins Environment, Land & Resources Department

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1 Number 1090 October 13, 2010 Client Alert Latham & Watkins Environment, Land & Resources Department Recent Legislative Changes Affecting Pending and Future Projects Under CEQA This legislation is intended to promote a more efficient and expedited process for CEQA review and litigation by discouraging frivolous CEQA actions, promoting the use of mediation and expedited litigation schedules, strengthening the requirements for exhaustion of administrative remedies and allowing project applicants and lead agencies greater latitude to use prior environmental analyses. On September 29, 2010, Governor Arnold Schwarzenegger signed into law Assembly Bill 231 (AB 231) and Senate Bill 1456 (SB 1456), which amend certain provisions of the California Environmental Quality Act, California Public Resources Code 21000, et seq. (CEQA). Enacted jointly, these bills were recognized as urgency statutes and go into immediate effect. Both bills will expire on December 31, This legislation is intended to promote a more efficient and expedited process for CEQA review and litigation by discouraging frivolous CEQA actions, promoting the use of mediation and expedited litigation schedules, strengthening the requirements for exhaustion of administrative remedies and allowing project applicants and lead agencies greater latitude to use prior environmental analyses. Governor Schwarzenegger also signed into law Assembly Bill 2565 (AB 2565) on August 27, This legislation allows public agencies to charge and collect a reasonable fee from members of the public for a copy of environmental documents prepared under CEQA. This Client Alert summarizes these recent amendments and highlights how these changes will affect pending and future CEQA actions. Discouraging Frivolous CEQA Claims The most notable amendment made by SB 1456 adds California Public Resources Code , which authorizes a party to file a motion for sanctions against another party for filing a frivolous CEQA claim on or before December 31, Frivolous is defined as totally and completely without merit. Any motion for sanctions must be filed at least 30 days before a hearing on the merits of the CEQA action. If the court determines the claim is frivolous, SB 1456 allows the court to impose appropriate sanctions up to $10,000 on either the responsible party, attorney or law firm. A party s ability to bring a motion for sanctions for a frivolous CEQA action under SB 1456 differs in two ways from existing law. First, if an attorney presents a petition, pleading or motion which violated an implied certification as to its legal and factual merit, existing law allows a party to bring a motion for sanctions only after providing the offending party with a 21-day safe harbor period in which to withdraw the challenged petition, pleading or motion. 1 SB 1456 does not require any such safe harbor period and only requires that the motion for sanctions be brought Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in the United Kingdom, France, Italy and Singapore and an affiliated partnership conducting the practice in Hong Kong and Japan. Latham & Watkins practices in Saudi Arabia in association with the Law Office of Mohammed Al-Sheikh. Under New York s Code of Professional Responsibility, portions of this communication contain attorney advertising. Prior results do not guarantee a similar outcome. Results depend upon a variety of factors unique to each representation. Please direct all inquiries regarding our conduct under New York s Disciplinary Rules to Latham & Watkins LLP, 885 Third Avenue, New York, NY , Phone: Copyright 2010 Latham & Watkins. All Rights Reserved.

2 at least 30 days before the hearing on the merits of the CEQA action. Second, existing law defines a frivolous action as either (a) totally and completely without merit or (b) for the sole purpose of harassing an opposing party. 2 SB 1456 takes a more narrow definition, limiting frivolous actions to those that are totally and completely without merit. Regardless of these differences, it is likely that a court will interpret this legislation in conjunction with existing statutes regarding frivolous actions, including California Civil Code Notably, this amendment applies to individual claims within a CEQA suit and does not require an entire action to meet the definition of frivolous. This allows a public agency or project applicant to target individual claims within a CEQA proceeding which may meet the grounds for frivolousness. Encouraging Mediation In 1995, CEQA began promoting the use of out-of-court proceedings by requiring litigation parties to engage in mandatory settlement proceedings at the start of any CEQA action. 3 With the passage of SB 1456, these efforts now extend to mediation. SB 1456 adds the new California Public Resources Code , which authorizes a person who wishes to bring a CEQA action to file with the lead agency and any real parties in interest a request for mediation within five business days from the date of the filing of a notice of determination on or after July 1, This section expressly does not apply to projects where the lead agency has not filed a notice of determination. In an attempt to prevent any delay associated with the mediation, SB 1456 provides that the mediation request is deemed to be denied if the lead agency fails to respond within five business days of receipt of the request, and the CEQA action would then proceed under the customary statutory time frames. SB 1456 also incorporates an amendment to California Government Code to require that any mediation proceeding that is conducted must be held concurrently with any judicial proceeding under CEQA. But in a move that will result in potentially longer delays, SB 1456 also provides that if a lead agency accepts the mediation request, the limitations periods under California Public Resources Code et seq. are tolled until the completion of the mediation proceedings. This includes the 30-day limitations period within which to bring a CEQA action under California Public Resources Code The tolling of the statute of limitations may allow project opponents greater ability to delay the filing of a CEQA lawsuit if a lead agency accepts the request for mediation. This could result in more time for project opponents to craft CEQA pleadings and arguments and less certainty when gauging how long a CEQA action may proceed. However, a project opponent s ability to delay the CEQA action may only last so long under the existing Government Code 66032(d), the CEQA action is automatically reactivated in 90 days unless the parties reach a settlement or stipulate to further mediation. Expedited Litigation Schedule Reflecting the Legislature s preference for prompt resolution of CEQA actions, existing law allows a party to a CEQA suit to request a briefing schedule and hearing date, in which all briefing must be completed within 90 days of the request and a hearing held within 30 days thereafter. 4 In the event the public interest requires a quicker resolution of the case, SB 1456 amends California Public Resources Code (d) to authorize the Attorney General to file a motion with the court seeking a more expedited schedule for resolution of a CEQA action. 2 Number 1090 October 13, 2010

3 This amendment is unlikely to have a strong impact on the majority of pending and future CEQA litigations, as existing law already allows a party to seek an expedited litigation schedule. While a motion for an expedited schedule filed by the Attorney General will likely carry greater weight than a motion from an individual party, it is unclear how often the Attorney General office will choose to involve itself in a pending CEQA action or how a party may be able to prompt the Attorney General to act its behalf. Stricter Standards for Exhaustion of Administrative Remedies Previous law provided that an organization that was formed after a project approval was held to have exhausted its administrative remedies if a member of that organization personally objected to the project during the public comment period or public hearing. 5 SB 1456 strengthens this requirement by amending California Public Resources Code 21177(c) to now require a member of a recently formed organization to present the specific grounds for noncompliance to the public agency during the public comment period or public hearing on the project, in addition to the requirement in current law that a member of the organization has objected to the project in general. Greater Reliance on Prior Environmental Analyses CEQA previously allowed a lead agency to use a tiered environmental impact report (EIR) for a later project if the agency determined that the later project was consistent with the initial project and met certain criteria. To allow for greater use of prior environmental analyses, AB 231 amended California Public Resources Code 21094(a) to now allow a lead agency, until January 1, 2016, to incorporate by reference a finding of overriding considerations made in a prior EIR for a later project if the following conditions are met: The lead agency determines that the project s significant impacts on the environment are not greater than or different from those identified in the prior EIR; The lead agency incorporates into the later project all the applicable mitigation measures identified by the prior EIR; The prior finding of overriding considerations was not based on a determination that mitigation measures should be identified and approved in a subsequent environmental review; The prior EIR was certified not more than three years before the date that the findings are made for the later project; and The lead agency has determined that the mitigation measures or alternatives found to be infeasible in the prior EIR remain infeasible. In order to incorporate by reference an earlier finding of overriding considerations, a lead agency must also find that the later project is (1) consistent with the earlier program, plan, policy or ordinance which was the subject of the earlier EIR, (2) consistent with all applicable local land use plans and zoning and (3) does not require the preparation of a supplemental or subsequent EIR under California Public Resources Code Lead agencies are still required to prepare an initial study for the subsequent project. SB 1456 also amends California Public Resources Code to allow a lead agency, until January 1, 2016, to forgo the examination of a cumulative effect for a later project if the agency finds that it has been adequately addressed in a prior EIR, unless the lead agency finds that the incremental effects of the project are cumulatively considerable. 3 Number 1090 October 13, 2010

4 For purposes of determining whether a project s incremental effects are cumulatively considerable, the lead agency must evaluate the project in connection with the effects of past, present and probable future projects. If the lead agency determines incremental effects of a project are cumulatively considerable, the later EIR, mitigated negative declaration or negative declaration must examine those effects. These changes may allow lead agencies and project applicants to make greater use of prior environmental analyses in certain situations, preventing the need to repeat findings of overriding considerations and cumulative impacts analyses where subsequent projects remain consistent with prior CEQA documents. However, given the strict conditions that limit when these procedural shortcuts may be used, lead agencies should ensure that specific findings are made on the record which demonstrate that a project meets these conditions and is thus entitled to rely on the earlier environmental analyses. Public Agencies May Charge for Copies of Environmental Documents Existing CEQA law authorizes a lead agency to charge and collect a reasonable fee from a project applicant to recover the estimated costs incurred by the lead agency in conducting the environmental review under CEQA. AB 2565 extends this cost-recovery ability by authorizing a public agency to charge and collect a reasonable fee from members of the public for a copy of a CEQA environmental document, provided that the fee does not exceed the cost of reproducing the environmental document. 7 AB 2565 also allows a lead agency to produce a requested environmental document in an electronic format, as provided for in the California Public Records Act, California Government Code Endnotes 1 California Civil Code California Civil Code California Public Resources Code California Public Resources Code (a). 5 California Public Resources Code 21177(c). 6 California Public Resources Code 21094(b). 7 California Public Resources Code 21089(c)(1). If you have any questions about this Client Alert, please contact one of the attorneys listed below or the Latham attorney with whom you normally consult: Christopher W. Garrett christopher.garrett@lw.com Lauren Ross lauren.ross@lw.com James L. Arnone james.arnone@lw.com Cindy Starrett cindy.starrett@lw.com Daniel Green Land Use Project Manager daniel.green@lw.com 4 Number 1090 October 13, 2010

5 Client Alert is published by Latham & Watkins as a news reporting service to clients and other friends. The information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the attorney with whom you normally consult. A complete list of our Client Alerts can be found on our website at If you wish to update your contact details or customize the information you receive from Latham & Watkins, please visit to subscribe to our global client mailings program. Abu Dhabi Barcelona Beijing Brussels Chicago Doha Dubai Frankfurt Hamburg Hong Kong Houston London Madrid Milan Moscow Munich New Jersey New York Orange County Paris Riyadh* Rome San Francisco Shanghai Silicon Valley Singapore Tokyo Washington, D.C. * In association with the Law Office of Mohammed A. Al-Sheikh 5 Number 1090 October 13, 2010