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After months of anticipation, the Supreme Court issued its ruling on City of San Diego v. Trustees of the California State University, S199557, affirming the appellate court’s ruling that the California State University (CSU) should have evaluated one or more possible project modifications to its Project to reduce or avoid unmitigated off-site traffic impacts.

The case centered on CSU’s plans to expand San Diego State University to accommodate more than 10,000 additional students – part of a statewide program to expand CSU’s statewide enrollment capacity by 107,000. Although CSU has budgeted substantial state and non-state funds to expand its campuses, CSU has repeatedly declined to use its financial resources to reimburse other public agencies for its self-determined fair share of mitigating its projects’ off-campus environmental effects. Instead, CSU argued  that pursuant to City of Marina v. Board of Trustees of California State University (2006) 39 Cal.4th 341 (Marina) it may not lawfully pay to mitigate off-campus environmental effects of its projects unless the Legislature makes an appropriation for that specific purpose. CSU argued that, because the Legislature may not make appropriations for CSU’s off-site mitigation purposes, such mitigation was infeasible. Applying its interpretation of Marina, CSU certified the San Diego State University EIR based on a statement of overriding considerations, determining that the project’s benefits outweigh its unmitigated effects.

The Court rejected CSU’s interpretation of Marina, applying a de novo standard of review. The Court held that Marina did not justify CSU’s position that CSU may only contribute funds for off-campus mitigation if designated for that specific purpose. First, the Court held that CSU enjoys some discretion over the use of appropriations. (Citing Ed. Code, §§ 89770, 89771, 89771, 89773, 90083.) Second, neither Marina nor any other decision suggests that mitigation costs for a project funded by the Legislature cannot appropriately be included in the project’s budget and paid with the funds appropriated for the project; this is in-line with CEQA’s directive which requires that “[a]ll state agencies . . . shall request in their budgets the funds necessary to protect the environment in relation to the problems caused by their activities.” (Pub. Resources Code, § 21106; cf. County of San Diego v. Grossmont-Cuyamaca Community College Dist. (2006) 141 Cal.App.4th 86, 101-105.) Third, no provision of CEQA conditions the duty of a state agency to mitigate its project’s environmental effects on the Legislature’s grant of an earmarked appropriation. Finally, the Board’s improper application of Marina depends on a legally unsupportable distinction between environmental impacts occurring on the project site and those off-site.

The Court stressed that CSU’s proposed interpretation of Marina would lead to unreasonable consequences. The Court recognized that such a holding would apply to all state agencies, effectively forcing the Legislature to sit as “a standing environmental review board to decide on a case-by-case basis whether state agencies’ projects will proceed despite unmitigated off-site environmental effects.” (Opinion, p. 19.) The Court also recognized that under CSU’s interpretation, if the responsible state agency were to proceed with a project without mitigation because the Legislature did not earmark funds, the cost of addressing a project’s contribution to cumulative impacts would place a financial burden on local and regional government agencies. Further, CSU’s interpretation would render off-site mitigation infeasible for many if not all state projects and more projects would proceed without mitigation pursuant to statements of overriding considerations. The Court also rejected CSU’s new arguments under Education Code section 67504, Government Code section 13332.15, and Education Code section 66202.5.

Ultimately, the Court held that its rejection of CSU’s interpretation of Marina would preclude the Board from finding mitigation infeasible due to unavailability of earmarked funding for future projects. While CSU’s core function may be education, it also has a duty to “avoid or mitigate the environmental effects of its projects.” (Opinion, p. 26-27.)

Key Point:

State agencies may not avoid their duty to avoid or mitigate the environmental effects of their projects simply because the Legislature has not earmarked funds for “mitigation.” Lead agencies have a duty to consider alternative mitigation measures or alternative funding measures for off-site impacts where its preferred mitigation is uncertain.

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