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In Town of Atherton v. Cal. High-Speed Rail Authority, (2014) Cal. App. LEXIS 670, the Court of Appeal for the Third District upheld the final program environmental impact report (EIR) for the segment of the California High Speed Rail project linking the San Francisco Bay Area to the Central Valley.

In the EIR, the California High Speed Rail Authority (the Authority) identified the Pacheco Pass route, which would direct the train west near Fresno, as the preferred alternative route to the Bay Area.  The Authority also considered the Altamont Pass route, which would turn west closer to Stockton.  Several environmental groups and cities on the San Francisco Peninsula (the Petitioner) challenged the EIR claiming that it violated the California Environmental Quality Act (CEQA) because the EIR did not adequately analyze options for locations to elevate the track along the Peninsula, used a flawed revenue and ridership model, and contained an inadequate range of alternatives.

Despite not raising the issue of preemption with the trial court, the Authority sought to dismiss the case because the Interstate Commerce Commission Termination Act (ICCTA) preempted any CEQA remedy.  The court held that it did not even need to address the “complex, difficult, and controversial subject” of ICCTA preemption because the market participant exception to preemption applied in the case.  Under the market participant exception, because the state is acting as a market participant and building the project, rather than functioning as a regulator, the project is subject to CEQA review.  While it was unusual for the Petitioner to invoke the market participant exception to compel a state agency to comply with state law, the court found no support for the Authority’s assertion that only the public agency could use the doctrine defensively to protect actions it elected to take in the market.    

On the merits of the case, the court first held that the analysis of locations to elevate the track on the Pacheco Pass route was adequate for a program EIR.  A program EIR allows for a tiering process of review where the program EIR provides coverage of general matters, followed by site-specific project-level EIRs that provide a more thorough analysis.  In this case, the court stated that requiring project-level review of different sites for elevating the track would undermine the purpose of tiering and burden the program EIR with details that are more appropriate for a project EIR.

Next, the court held that the revenue and ridership model used in the EIR was adequate.  While experts disagreed on the best model to use, the court stated that disagreement among experts does not make an EIR inadequate and it would be improper for the court to determine the credibility of experts.  As a result, Petitioner failed to satisfy its burden of showing that the model was “clearly inadequate or unsupported” and substantial evidence supported the Authority’s model.

Finally, the court rejected Petitioner’s argument that the Authority needed to include a broader range of alternatives in the EIR.  Petitioner provided several additional alternatives through a European consulting firm, but the court stated that the Authority was not required to consider alternatives that were substantially similar to the alternatives already analyzed in the EIR.  Further, the Authority’s feasibility determination was entitled to significant deference by courts.  Each of Petitioner’s alternatives was either redundant or infeasible and as a result, the court held that the Authority considered an adequate range of alternatives in EIR.


The market participant doctrine is not just a doctrine for public entities to invoke defensively to refute preemption claims.  As in this case, it can be used by private parties to force public entities to comply with state law.

Additionally, the court reinforced that the purpose of a program EIR is to provide decision-makers with an overview of the cumulative impacts of a project and allow for consideration of broad policy alternatives and program-wide mitigation measures early in the review process.  It is inefficient and counterproductive to include more specific, project-level analysis in a program EIR when a tiered review process is being utilized.

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