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The California Supreme Court accepts briefing from Poole & Shaffery in support of efforts to obtain clarification regarding environmental regulations for land development projects.

When evaluating proposed land development projects, it is unquestioned that matters of environmental protection and conservation are of critical importance and must receive great consideration. Exactly what conservation measures are required and how those protections should be implemented, however, is unclear, especially given the ever-evolving understanding of issues such as greenhouse gas emissions and global warming, as well as constant technological advancements aimed at addressing environmental concerns. As a result, parties throughout the state are continuously looking for guidance. The California Supreme Court recently issued an opinion regarding environmental challenges to a major development project. Unfortunately, rather than clarity, the opinion risks creating further confusion.

The California Environmental Quality Act

Most Californians are justifiably proud of the fact that our state is at the forefront of environmental protections. Certainly one of the reasons the state is a leader in environmental protections is the California Environmental Quality Act (CEQA). CEQA is a statute that requires state and local agencies to identify the environmental impacts of their actions and to take steps to avoid or mitigate those impacts, if feasible. Virtually every development project that requires a discretionary governmental approval will require at least some environmental review pursuant to CEQA. Depending on the potential environmental effects of a project, a substantial review of the project's impacts may be conducted in the form of an environmental impact report (EIR). A project may not be approved as planned if feasible alternatives or mitigation measures can be implemented to substantially lessen the significant environmental effects of the project.

The Proposed Newhall Ranch Development

Newhall Ranch is a major development proposed for north Santa Clarita County on the Interstate 5 corridor, adjacent to the City of Santa Clarita and the planned community of Valencia. Encompassing 12,000 acres, with housing for nearly 60,000 people, and an estimated creation of approximately 19,000 permanent jobs, the Newhall Ranch project is one of the largest in state history.

With a project of this magnitude, environmental review represented a considerable challenge. Environmental review of the Newhall Ranch project was initiated in 1996. Over the ensuing years, several EIRs were prepared for the project. Finally, in 2010, after five years of preparation, including three public hearings, a 120-day public review period, and a year of responding to comments and revising the documents, the California Department of Fish and Wildlife and the U.S. Army Corps of Engineers completed the current EIR in 2010. No fewer than eight different governmental agencies, representing every level of government, studied the EIR and approved the project, and each of the agencies imposed conditions on the project to protect the environment. Ultimately, the Newhall Ranch project was deemed to be remarkably "green," having instituted a wide array of conservation measures as well as protections designed to limit any environmental impacts, which are far too numerous to list here. Indeed, the EIR, which was more than 5,800 pages long, was deemed to be state of the art at the time.

Litigation Regarding Newhall Ranch EIR

Soon after the EIR was approved, it became the subject of extensive litigation. The plaintiffs, led by several environmental groups, challenged several different aspects of the EIR, including the sufficiency of the analysis regarding greenhouse gas emissions anticipated from the project. The plaintiffs claimed that the methodology used to determine the impact of greenhouse gas emissions from the project was not legally permissible under CEQA. After a ruling by the Superior Court, followed by a ruling from the Court of Appeal, the Newhall Ranch project was appealed to the California Supreme Court in 2014.

On behalf of the Santa Clarita Valley Economic Development Corporation (SCVEDC), Poole & Shaffery submitted a brief to the Supreme Court as an amicus curiae – a term that literally translates to "friend of the court" – to address issues raised by the case, specifically those relating to the greenhouse gas emissions analysis, as well as the anticipated impact that the Newhall Ranch project would have on the Santa Clarita Valley.

The California Supreme Court's Opinion

On November 30, 2015, the California Supreme Court issued its opinion in Center for Biological Diversity v. California Department of Fish and Wildlife (Case No. S217763). Importantly, the Court rejected the plaintiffs' argument about the greenhouse gas emissions, finding that the methodology employed in the EIR was legally permissible. Nevertheless, the Court went further – beyond the issues raised by the plaintiffs – and found that even though the methodology was proper, the EIR's conclusion that the greenhouse gas emissions would be "less than significant" was not properly supported and, therefore, the EIR was legally deficient.

The Court's ruling is troubling for several reasons. Notwithstanding the problematic procedural issues, namely ruling on issues that were not properly briefed and argued, the opinion also appears to presents a template for efforts to obstruct – and potentially kill – development in California. Critically, even though the 2010 EIR was properly based on goals for reductions in greenhouse gas emissions at that time, the opinion hints that it may now be necessary for the EIR to meet new, stricter environmental regulations. If so, the ruling would effectively indicate that all developments must comply with ever-emerging technological advances – even those that come well after the project is designed and approved, provided there is any ongoing legal challenge to the development. This would assuredly incentivize litigation – regardless of merit – to block any development. As Justice Chin pointed out in his dissent, "Delay can become its own reward for project opponents. Delay the project long enough and it has to meet new targets, and then perhaps new targets after that."

Furthermore, potential economic impacts of the ruling are quite significant. Without new developments, it will be extremely difficult – if not impossible – to accommodate the state's growing population. A recent Wall Street Journal article indicated that housing costs in California are the highest in the country because the demand far exceeds the supply, stating that median house price in the Santa Clarita metro area is $507,000, compared with $210,000 in Dallas, $290,000 in Miami, $388,000 in Washington, D.C., and $412,000 in New York. Absent additional development, the demand for existing properties will only continue to grow, thereby necessarily increasing the costs for those properties – whether residential or commercial – and pricing many out of the market. It is not difficult to imagine that, if left unaddressed, this would have significant impacts on the California economy by forcing industry out of the state, thereby reducing the tax base and increasing demands for social welfare.

It is unquestioned that environmental protections and conservation efforts are crucial. However, as the California Supreme Court has previously cautioned, rules regulating the protection of the environment must not be subverted into an instrument for the oppression and delay of social, economic, or recreational development and advancement. Notwithstanding this warning, the Newhall Ranch project has been mired in regulatory procedures and litigation for twenty years since the environmental review process was first commenced, and for six years since the "state of the art" EIR was finalized. Based on the Supreme Court's ruling, litigation will invariably continue. This obstacle to development – not just of the Newhall Ranch project, but of projects across the state – is certainly not what was envisioned by the enactment of CEQA.

On behalf of the SCVEDC, Poole & Shaffery has recently submitted a letter to the California Supreme Court in support of the Newhall Ranch developer's petition for rehearing.

About the SCVEDC

The SCVEDC is a California 501(c)(3) nonprofit corporation established in 2009 to represent the united efforts of regional industry and government leaders in the Santa Clarita Valley area of Santa Clarita County, to provide an integrated approach to attracting, retaining, and expanding a diversity of business and industry in the Santa Clarita Valley. The SCVEDC has become a recognized voice of the business community in the Santa Clarita Valley. Learn more at www.scvedc.org.