In a much anticipated decision, the California Supreme Court held in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority that lead agencies can use future predicted conditions as an environmental baseline in assessing the impacts of proposed projects. The court held that in order for an agency to omit the normally required existing conditions baseline analysis and rely solely on a predicted conditions baseline, it must first demonstrate that the existing conditions analysis would be uninformative or misleading. In doing so, the court disapproved of the holdings in Sunnyvale West Neighborhood Assn. v. City of Sunnyvale City Council (2010) 190 Cal.App.4th 1351 (Sunnyvale) and the Fifth Appellate District’s decision in Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48 (MOC).

The dispute in Neighbors for Smart Rail originated over the second-phase of a transit project called the Exposition Transit Corridor, a proposed light rail line connecting downtown Los Angeles with Santa Monica. The Exposition Metro Line Construction Authority (“Expo Authority”) approved the project on February 4th,
2010.

The central issue in the case is the environmental baseline that was used to evaluate traffic, air quality, and greenhouse gases. CEQA Guidelines section 15125(a) states that an EIR “must include a description of the physical environmental conditions in the vicinity of the project, as they exist at the time the notice of preparation is published, … [t]his environmental setting will normally constitute the baseline physical conditions by which a lead agency determines whether an impact is significant.” Lead agencies have relied on the use of the word “normally” in the guideline to use environmental baseline based on conditions that exist after the publication of a notice of preparation (“NOP”). This typically happens for large projects that will be constructed over a long period of time. Lead agencies often argue that a future environmental baseline reflecting the likely conditions in which the project will be built gives a more accurate assessment of the project’s impacts.

The Supreme Court addressed a related environmental baseline issue in Communities for a Better Environment v. South Coast Air Quality Management District (2010) 48 Cal.4th 310 (“CBE”). There, the court held that a petroleum refinery project must use actual historical emissions as its environmental baseline for evaluating a proposed expansion; it was impermissible to use maximum permitted capacity as a hypothetical baseline. The court noted that neither CEQA nor the CEQA Guidelines “mandates a uniform, inflexible rule for determination of the existing conditions baseline. Rather, an agency enjoys the discretion to decide, in the first instance, exactly how the existing physical conditions without the project can most realistically be measured, subject to review, as with all CEQA factual determinations, for support by substantial evidence.” The court did not address whether a future baseline reflecting an agency’s projected environmental setting could be used as the basis for analysis in an EIR.

Since CBE, two appellate districts have held that agency’s may not use a projected environmental setting beyond the date of project approval. The Sixth Appellate District’s decision in Sunnyvale and the Fifth Appellate District’s decision in MOC both held that projected future conditions provide an improper baseline for determining traffic impacts.

In preparing the EIR for the Exposition Transit Corridor, the Expo Authority determined that a 2009 baseline (when the NOP was published) would not provide a reasonable basis for determining the project’s traffic and air quality impacts. The EIR instead uses a 2030 baseline that the agency determined based on projected changes in the environmental setting between 2009 and 2030. This approach would be a clear violation of CEQA under Sunnyvale or MOC.

The Second District disagreed with the Sunnyvale and MOC opinions and upheld the Expo Authority’s use of a future baseline. The Second District held 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. As a major transportation project that will not even begin to operate until 2015 at the earliest, its impact on presently existing traffic and air quality conditions will yield no practical information to decision makers or the public.”

The Supreme Court struck a balance between the split in the appellate districts. The court agreed with the Second District, and correspondingly disapproved of Sunnyvale and MOC, in holding that agencies may rely solely on a predicted conditions baseline. The court’s decision also imposes a new requirement that will result in a more restrictive use of future baselines than what would have otherwise been permissible under the Second District’s ruling. The court held that agencies can rely solely on a predicted conditions baseline only after they justify the omission of an existing conditions baseline. Before an agency can eliminate an analysis based on existing conditions, it must first determine, based on substantial evidence, that the inclusion of an existing conditions analysis would be misleading or without informational value.

The court stated, “[t]o the extent a departure from the ‘norm[]’ of an existing conditions baseline (Guidelines, § 15125(a)) promotes public participation and more informed decisionmaking by providing a more accurate picture of a proposed project’s likely impacts, CEQA permits the departure. Thus an agency may forego analysis of a project’s impacts on existing environmental conditions if such an analysis would be uninformative or misleading to decision makers and the public.”

The court then applied this rule to the present case and held that, while Expo demonstrated that a predicted baseline was a more informative analysis, there was no evidence in the record that an existing conditions analysis would have been uninformative or misleading. The court implied that in this case, the lead agency should have analyzed the project’s impacts against an existing conditions baseline as well as a predicted baseline. Nonetheless, the court held that under these circumstances, the omission of an existing conditions baseline did not deprive decision makers or the public of substantial information relevant to approving the project, and was therefore a non-prejudicial error.

The court also upheld the adequacy of mitigation for spillover parking effects, which was the only other issue before the court. The court held that the agency made the proper findings for reliance on local jurisdictions to implement mitigation measures and that the findings were supported by substantial evidence. The Petitioner’s speculation that local agencies may not agree to permit the parking facilities was not sufficient to show that the mitigation measures violated CEQA.

Key Point: The baseline issue has important implications for all environmental review documents under CEQA as it affects the underlying basis of the analysis. After this decision, agencies have the discretion to rely solely on a predicted conditions baseline; however, in doing so, agencies must be sure to demonstrate that the inclusion of an existing conditions baseline would be uninformative or misleading. It is not enough to show that the predicted conditions baseline is supported by substantial evidence or that it is more informative than the existing conditions baseline. Agencies would be wise to include explicit findings in their project approval documents supporting the determination to rely solely on a predicted conditions baseline.