Makeover or Makeweight? SB 743 and CEQA Reform

Bell Partners, Northern California, Bay Area, Bell Institutional Fund VI, Pennsylvania Public School Employees’ Retirement System

By Arthur Coon and Matthew Henderson

Few pieces of legislation have engendered as much debate both inside and outside the courtroom as the California Environmental Quality Act (or “CEQA”) has in the four decades since its enactment. CEQA’s byzantine network of statutes, regulations, and case law has provided an almost endless source of controversy, confusion, and confrontation for courts, practitioners, and developers throughout California. As CEQA’s reach has grown over the years, reforming (or “modernizing,” depending on one’s outlook) its provisions has become to some akin to the holy grail—greatly desired, but ever elusive.

Bay Area real estate The RegistryEarlier this year the California Legislature and Governor Brown took a serious, if incremental, step toward meaningful CEQA reform. This fall Senate Bill 743 was passed into law following the last-minute inclusion of certain CEQA modifications from former Senate Bill 731.

SB 743 made several substantive changes to CEQA designed to streamline its application to certain types of projects.

First, the law provides that aesthetics and parking impacts will not be grounds for challenging certain projects in urban areas. Under a new provision added by SB 743 the environmental review process for “a residential, mixed-use residential, or employment center project on an infill site within a transit priority area” will not consider such impacts. The terms “infill site” and “transit priority area” are relatively broadly defined so as to cover significant portions of urban areas in California, so this section should make it easier to get urban infill projects through CEQA review.

Second, SB 743 may change the way CEQA evaluates traffic impacts. The current approach to this issue under CEQA is based on a “level of service” analysis, which is based on congestion management. SB 743 mandates that the Office of Planning and Research come up with new guidelines “for determining the significance of transportation impacts of projects within transit priority areas.” The aim here is apparently to come up with a more flexible traffic standard that tries to facilitate infill projects, active transportation, and reduction of greenhouse gas emissions. While the ultimate outcome is uncertain, if OPR can come up with an effective new approach to traffic management this provision may have benefits throughout the state.

Third, SB 743 expands an existing exemption for residential infill projects in areas covered by a specific plan that was itself subject to environmental review to also cover certain mixed-use residential/commercial projects. To qualify for the expanded exemption, these projects will need to meet certain standards intended to help implement SB 375, a landmark 2008 land use and transportation planning law.

Finally, the new law also speeds up the judicial process for so-called “environmental leadership” projects—a narrow class comprising a small number of “green” mega-projects. A prior effort at CEQA reform in AB 900 provided that litigation against such projects had to be first brought in the Courts of Appeal, but that provision was struck down as unconstitutional by an Alameda County judge. SB 743 circumvents this ruling by directing the adoption of court rules requiring that CEQA challenges to these projects be concluded within 270 days. Whether this time limit is unrealistically ambitious remains to be seen.

None of these reforms should be considered monumental, and for many CEQA reform advocates SB 743 will be viewed as a disappointment. Nonetheless, the bill represents a real if incremental change in the law. Given CEQA’s tortured history in the Legislature and courtrooms, SB 743 should be welcomed as a modest yet significant step on the long and winding road to reform.

Arthur Coon is a shareholder and co-chair of the Land Use Practice Group at Miller Starr Regalia. He can be reached at arthur.coon@msrlegal.com.

Matthew Henderson is a land use and litigation shareholder at Miller Starr Regalia. He can be reached at matthew.hunderson@msrlegal.com.

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