Collision Course
California Lawyer

Collision Course

Environmental challenges brought under CEQA threaten California's high-speed trains.

May 2013


High-speed rail "will utterly change our way of life here, and not for the better."
-Anja Raudabaugh, executive director, Madera County Farm Bureau

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No one would describe the countryside around the San Joaquin Valley town of Madera as beautiful. It is a working landscape in the most fundamental sense: a patchwork of almond orchards, vineyards, alfalfa fields, and dairy farms. The terrain is flat. On clear days you can see the looming mass of the Sierra Nevada to the east, and the less precipitous Diablo Range to the west. Most days, however, are not clear; the air is murky with dust, copious emissions from the endless lines of traffic on Highway 99 and Interstate 5, and urban smog blown down from the Bay Area.

Still, the farmers and ranchers who live here are proud of their vocations and community, and they prosper in a measured way. In a typical year, Madera County generates more than $1.5 billion in agricultural revenue. Maderans are thus not anxious for change - and therefore have shown great resistance to California's ambitious high-speed rail project. The proposed route would plow a broad right-of-way through the county's cropland, ultimately permitting trains that reach speeds up to 220 miles per hour to shuttle nearly 25 million people a year between Los Angeles and San Francisco.

"It will utterly change our way of life here, and not for the better," says Anja Raudabaugh, the executive director of the Madera County Farm Bureau. Raudabaugh hardly looks the part of a ramrod for the local growers. Tall, blond, and city-smart, she spent seven years in Washington, D.C., as an agricultural adviser - including three years as a legislative assistant to former Rep. Douglas Ose (R-Sacramento) and two at the Office of Management and Budget. But her rural street cred is impeccable: She grew up just east of Madera on an 8,000-acre ranch homesteaded by her ancestors in 1856.

"I met my husband in Washington, and at a certain point, we were ready to get out," she says. "Coming back here was natural. We recently had a baby. This is where I want him to grow up."

Raudabaugh took the farm bureau job in 2011 and quickly came to blows with the California High-Speed Rail Authority (HSRA), established in 1996 to direct the project's development. In order to secure federal funding, the authority was required to begin construction in the Central Valley. So in 2010, flush with a $3.5 billion federal grant and $9 billion in state bonds, HSRA announced plans to build the first 65-mile leg of the system from Merced to Fresno.

According to Raudabaugh, the authority has compelling reasons to build such a "railroad to nowhere." First, the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5) requires all federal project funds to be spent by the end of September 2017 - a deadline that couldn't be met if construction were to start in densely populated urban areas. Second, land is cheap in the Central Valley. Dollar for dollar, more momentum could be generated for the project there than at the urban ends of the line. But the clock is running on project completion - and HSRA is acutely aware of every tick.

"The authority also figured there wouldn't be any legal issues," Raudabaugh adds. "In L.A. or the Bay Area, they knew they'd be hit with lawsuits. I don't think they expected much trouble here."

How wrong they were. Last June, plaintiffs - including Madera and Merced counties, their local farm bureaus, the City of Chowchilla, four corporate property owners, and several highly irritated individual farmers - filed a trio of lawsuits against HSRA. (County of Madera v. Cal. High Speed Rail Auth., No. 34-2012-80001165 (Sacramento Super. Ct., filed June 1, 2012); City of Chowchilla v. Cal. High Speed Rail Auth., No. 2012-80001166 (Sacramento Super. Ct., filed June 1, 2012); and Timeless Inv. Inc. v. Cal. High Speed Rail Auth., No. 2012-80001168 (Sacramento Super. Ct., filed June 4, 2012).)

The Madera plaintiffs alleged that a significant portion of the project would "deviate from existing transportation corridors," resulting in the destruction of or interference with "thousands of acres of farmland, wildlife habitat, hundreds of homes, many businesses, commercial properties and industrial facilities, existing roads and water delivery facilities."

The plaintiffs further alleged that the final environmental impact report (EIR) for the first phase was faulty, and improperly defers analysis and mitigation. The suit was filed under provisions of the California Environmental Quality Act (CEQA), enacted by the Legislature in 1970. (Cal. Pub. Res. Code §§ 21000-21189.3) A state analogue to the National Environmental Policy Act (NEPA) (42 U.S.C. §§ 4321-4370h), CEQA is the more comprehensive statute, applying not only to public projects but also to private projects that require sanction from state or local agencies.

There's a certain irony here, Raudabaugh acknowledges. Typically, farmers and ranchers loathe CEQA, viewing it as a hobble to efficient, profitable enterprises. But she says the growers' experience with CEQA taught them that the statute "provided rights and opportunities" - and perhaps a chance to sidetrack high-speed rail before the first train leaves the station.

Late last year Sacramento Superior Court Judge Timothy Frawley consolidated the three CEQA cases against HSRA, but he refused to impose a preliminary injunction to halt all work on the Merced-Fresno section. In February the property owners withdrew their suit, and the Chowchilla plaintiffs settled with the agency for a promise to consider alternative routes and $300,000 in attorneys fees. That left the Madera case, which was scheduled for a hearing on the merits in April.

"At this point, we need all the help we can get," Raudabaugh says. "The route will destroy many farms outright because the line will bisect properties, making it impossible to maintain functional operations. It will close 56 overpasses over Highway 99 in Madera County alone - and that will shut down many of our rural school districts. If the buses can't get the kids to the school, the schools lose their public funding."

From a broader standpoint, she continues, Madera's bucolic way of life will collapse. High-speed rail will make it possible for people to commute from Fresno to San Francisco in an hour and 20 minutes. The short ride, Raudabaugh says, "will spur massive residential and commercial growth around here. Even discounting the impacts to water, air, carbon emissions, and traffic, that kind of development is incompatible with commercial agriculture."

If that sounds like a public policy argument, Raudabaugh isn't shy about declaring her intent. "We've never made it a secret that delaying construction was part of our strategy," she says. "We don't have a lot of money, and we had to retain a Cadillac law firm to fight this. We want to win."

That Cadillac firm is Fitzgerald Abbott & Beardsley, based in Oakland. Lead plaintiffs counsel Barry H. Epstein acknowledges that he has represented developers battling CEQA more often than citizens groups invoking the act to fight a project.

"The fundamental objections my clients have are all about the routing," Epstein says. "As the route stands, it will devastate agriculture and communities. Not all CEQA cases can be settled for additional mitigation." Epstein took that argument all the way to the courthouse steps.

To proponents of high-speed rail, Madera County's CEQA challenge was just the latest example of invoking the statute to frustrate economic development.

"High-speed rail is the kind of project California really needs," says Gary L. Toebben, president and CEO of the Los Angeles Area Chamber of Commerce. "CEQA has an impact on thousands of projects in the state each year," he continues. "Much of the impact is positive, but there are far too many cases where businesses are using CEQA to block competition, and neighbors are using it to block transit and affordable housing. These suits run up the costs of projects astronomically and impose time delays that are measured in years - or even decades."

High-speed rail advocates in the Legislature anticipated CEQA suits from the project's opponents and sought to preempt them. Last June, then-state Senator Michael Rubio (D-Shafter) introduced SB 317 to exempt the first phase of the project from CEQA mandates. But Rubio's bill met with fierce opposition and was quickly shelved.

"It basically would've gutted CEQA," says Tom Adams, the former board president of the California League of Conservation Voters. "Even the proponents of the bill now acknowledge it was poorly drafted, and that withdrawing it was the only reasonable course. The problems facing high-speed rail have more to do with poor decisions by agency managers than any putative burdens imposed by CEQA."

California Senate President pro tem Darrell Steinberg (D-Sacramento) admits SB 317 wasn't ready for prime time. "Senator Rubio agreed with me that the proposal, with wide-ranging implications and little time for careful deliberation, wasn't ready to be introduced in bill form," Steinberg responded by email. "I said at the time that CEQA is too important a law to rewrite hastily in the final days of the legislative session."

Steinberg adds, "I also said that we need to be open to looking at ways to improve the law without undermining its fundamental purposes of public transparency and participation, feasible mitigation, and environmental protection."

At the opening of its 2013-14 session, the Legislature was poised for Rubio to introduce a modified version of last year's bill. But in February he abruptly resigned to take a governmental affairs job with Chevron Corporation, leaving a pro-development coalition called the CEQA Working Group in limbo.

Steinberg himself quickly introduced a less drastic measure (SB 731) that promised to "expedite" CEQA review for transportation and alternative energy projects, set new thresholds for environmental impacts, and simplify the process for resolving disputes that fall under the act.

But whatever plan there had been to promote the bill evaporated as lawmakers from both parties introduced more than two dozen competing measures by the end of the filing deadline for new legislation. Many of these aim to strengthen CEQA rather than streamline or curtail it. Senator Noreen Evans (D-Santa Rosa), for instance, proposes tougher environmental reviews (SB 617) and, in a companion measure (SB 754), more aggressive enforcement of mitigation measures. Other bills viewed favorably by CEQA originalists include SB 436, SB 633, and AB 823.

Opposing bills take their lead from Rubio's withdrawn measure. Senator Tom Berryhill (R-Modesto) introduced a near facsimile of it (SB 787); Senator Cathleen Galgiani (D-Stockton) would exempt high-speed rail and light-rail projects from CEQA review altogether (SB 525); and Assemblyman Jeff Gorell (R-Camarillo) seeks a similar exemption for landfills that use organic waste to generate green energy (AB 794).

Two bills propose methods for speeding CEQA challenges through the courts. Assemblyman Roger Dickinson (D-Sacramento) suggests creating special CEQA courts with limited appellate review (AB 515); Senator Ellen Corbett (D-San Leandro) would create an environmental division within the superior courts (SB 123). But the Judicial Council - which objects to specialty courts on policy grounds - quickly voted to oppose both bills.

The flurry of proposed legislation promises a free-for-all over changes to CEQA that could facilitate or stymie such major statewide projects as high-speed rail, huge tunnels drilled into the Sacramento River Delta for transporting water to the Southland, and fracking operations in the San Joaquin basin.

The central charge leveled against CEQA by its diverse critics is that it has succumbed to mission creep. Though they disagree about proposed changes, they share a belief that the statute has expanded well beyond its purview of reviewing projects, and proposing either mitigation or alternatives to environmental impacts. Now, they say, CEQA too often is used to stop development - solar and wind farms, for example, along with new freeways and strip malls.

Jennifer L. Hernandez, a partner in the San Francisco office of Holland & Knight and co-chair of the firm's national environmental practice, says case law is replete with examples of CEQA abuse. She cites the petition for a writ of mandate filed by opponents of a transportation plan that regional governments in San Diego had proposed. (Cleveland Nat'l Forest Found. v. San Diego Ass'n of Gov'ts (SANDAG), No. 37-2011-00101593 (San Diego Super. Ct. filed Nov. 28, 2011).)

The plaintiffs in that case contended that SANDAG's plan for meeting state carbon emission targets in 2020 and 2035 - required by an air quality measure known as SB 375 - was inadequate because it didn't project emissions beyond 2035. In December, Superior Court Judge Timothy B. Taylor set aside the EIR, finding that SANDAG had engaged in a prejudicial abuse of discretion in preparing the report.

"The problem here is that SANDAG met its targets as required, and was still sued," says Hernandez, who represented the defendants. "Now [the San Diego region] has a great emission reduction plan, but billions of dollars in transportation matching funds are at risk for no legitimate reason. The fact is, we can't establish carbon reduction targets beyond 2035 because we have no way to accurately forecast growth past that point. Any 'plan' would be guesswork."

Hernandez says she conducted an in-house study of all published opinions for the past 15 years in which CEQA plaintiffs appealed adverse EIR rulings. Despite claims that the statute is used to fight industrial pollution, her report concluded that less than 11 percent of the appellate cases involved industrial development. Most cases concerned infrastructure and mixed-use projects, followed by residential and commercial development.

"Twenty or thirty years ago, if you got your EIR you knew you'd survive in court - assuming you told the truth," Hernandez says. "The point was to take a hard look, provide disclosure, determine mitigation; then you were done. Now, it has all been upended. Things have expanded to the point that 'environmental view-sheds' - what you see from your kitchen window, for example - can be grounds for a CEQA suit against environmentally sound in-fill development. People will sue simply because they don't like the way a project looks. That wasn't the original intention of the act."

Hernandez adds that even good projects that fully comply with CEQA run a significant risk of losing court challenges. She noted in her report that E. Clement Shute Jr. - a leading plaintiffs lawyer and founding partner at San Francisco's Shute, Mihaly & Weinberger - asserted at a recent law school conference that CEQA compliance challenges had succeeded in 43 percent of appellate cases published in the 40-some years since the law was enacted. That figure, Hernandez wrote in her study, "is a remarkable statistical anomaly in administrative law litigation. ... In lawsuits pursued [under NEPA], the national equivalent and model for CEQA, the United States Supreme Court has upheld the adequacy of agency NEPA compliance in 100 percent of cases, nearly all the time in unanimous rulings."

But Rachel B. Hooper, managing partner of Shute Mihaly and lead plaintiffs counsel in the SANDAG case, disputes Hernandez's figures. "Over the past decade, the rate of CEQA litigation has essentially stayed the same - about 200 cases a year," Hooper says. "Of all the state projects subject to CEQA, only about 1 percent end up in court. Hernandez based her report on the published CEQA decisions; she didn't look at the vast majority of trial court decisions that were never appealed, and therefore not published."

Other CEQA critics agree that the statute has become a weapon for plaintiffs with hidden agendas. "We see a great law being abused for purposes that have nothing to do with the environment," says Carl Guardino, president and CEO of the Silicon Valley Leadership Group in San Jose and co-chair of the CEQA Working Group. "Our organization is hardly resistant to progressive environmental policies," he says. "We've led the transit sales tax measure for Silicon Valley, and we supported the 16-mile BART extension to the region."

Guardino claims he's witnessed particularly egregious examples of CEQA abuse while working on the BART light rail extension. "The project had [labor unions] suing the contracted developer of the Milpitas Station under CEQA over project labor agreements," he says. "It had nothing to do with environmental quality and everything to do with economic advantage. Months and months were lost because of that suit, and it increased project costs dramatically."

Hernandez at Holland & Knight adds, "We've seen a landfill company sue a competitor under CEQA to stop it from getting a contract. Again, the motivating factor had nothing to do with the impacts of the landfill project. It was a matter of gaining economic advantage, not environmental concern."

Conservation activist Adams, however, feels that allegations of greenmail are spurious, based more on sour grapes than on actual misuse of the statute. He cites San Francisco's Center for Biological Diversity as an undeserving target of CEQA critics who condemn some of the center's high-profile settlements in cases filed to protect endangered species and their habitats.

"The center is a real environmental group, not a shell organization with a hidden agenda," Adams says. "Those settlements are approved by the courts, and the center's assets are irrevocably dedicated to charitable purposes, as enforced by the state Attorney General. The business community has a problem with the center because it wins cases."

Parsing through the competing CEQA bills before the Legislature, a few central themes emerge. Rubio and his pro-development successors favor a "standards" approach to ameliorate what they consider the statute's weaknesses. In short, they contend that if a project satisfies rigorous environmental statutes and local zoning regulations, it should be spared the ruinous rounds of EIR challenges that could ultimately kill it.

"In the years since CEQA, we've passed a great many laws that have been very effective in protecting the environment," Rubio says. "Think of the federal and California Clean Water Acts, the federal Clean Air Act, the federal and state Endangered Species Act, AB 32 [stipulating dramatically reduced atmospheric carbon emissions], and SB 375 [requiring regional land use and transportation plans to meet AB 32's goals]. The problem is that a project - including truly green projects like high-speed rail, solar, and wind farms - must satisfy these statutes, and then they're still subject to CEQA litigation."

Rubio posits an example. "Say you have a plan that reduces parking, thereby encouraging mass transit. This helps meet required AB 32 and SB 375 goals. But the plan can still be challenged under CEQA because plaintiffs can claim drivers will keep circling for parking places - thereby increasing emissions.

"So under the existing statute," he concludes, "there is no security, no safe harbor, no way to reconcile conflicts. By allowing projects to proceed if they meet relevant and existing standards, we'll be able to protect our environment, build sustainable projects, and avoid a great deal of judicial gridlock."

Steinberg's bill, SB 731, doesn't stipulate a standards mechanism, but it does establish thresholds for specific categories of environmental impacts. Still, those thresholds, says Shute Mihaly's Hooper, could eventually translate into a de facto standards approach. She worries that replacing CEQA with a standards process would give developers a means to ram through destructive projects.

Citing the defendants' argument in SANDAG, Hooper notes that their regional transportation plan proposed to meet SB 375's greenhouse gas standards by constructing new freeways to reduce congestion and idling traffic on surface streets. "But we showed that emissions thereafter would have skyrocketed, because of growth induced by freeway expansion," she says. "The trial court ruled in our favor. Under a standards approach, the project would have gone forward."

But some environmental lawyers say the real issue isn't standards, but how they are applied. Nicholas C. Yost - a partner in the San Francisco office of SNR Denton, lead drafter of NEPA, and a lead drafter of CEQA - takes a generally positive view of the standards approach. "Every CEQA and NEPA case either ditches a project or allows it with extensive mitigation," Yost says. "If the Legislature decides to impose standards in lieu of mitigation, I see nothing inherently obnoxious about it. But at that point, the terms of the standards and mitigations are the critical issue."

Yost notes that CEQA has been amended many times, and that its reach has expanded through case law. "The people who are now saying CEQA is cumbersome have a point," he says. "But at the same time, we must remember CEQA and NEPA are strong laws that have served the public exceedingly well."

The CEQA Working Group, Guardino says, is determined to graft a standards approach onto the statute. And he wants well-conceived local and regional land use plans to be given more credence in environmental reviews. "If you have a plan that has been updated to satisfy SB 375, for example, that has to mean something," he says. "As it stands, you can have a great plan, the project meets all the requirements, and in the final analysis it counts for nothing."

Guardino also feels that CEQA should require greater transparency from organizations filing suit. Presently, the act assures anonymity to many plaintiffs. Unincorporated associations, for instance, are not required to reveal their memberships. "We keep seeing these 'Friends of ...' groups filing suits, and we have no idea who they are or what their real motives might be," he says. "The irony here is that CEQA was designed to improve transparency in the courts and government - and it's had the opposite effect."

Guardino claims he just wants to return CEQA to its original purpose: determining and reviewing impacts, and providing for mitigation. "It was never meant to kill projects, and that's often what it's used for today," he says. "This isn't a matter of developers versus environmentalists - the argument can't be framed that way anymore."

Hooper, however, is adamant that CEQA doesn't need an overhaul - at least not to the degree Guardino's group wants. "My colleagues and I are open to revisions that would help the law work better," she says. "But we don't want to see it dismantled - and that's what's being proposed."

She adds, "There is absolutely no evidence that CEQA is harming the economy. CEQA has existed through both good and bad economic cycles. The 'evidence' of harm our opponents are dredging up is anecdotal and ultimately fallacious."

As for the demand for increased transparency, Hooper views it as disingenuous - and ultimately dangerous. Motivation for filing a suit, she observes, has no legal bearing on access to the courts; what matters is whether a statute has been violated. "Demanding 'more transparency' could have a very chilling effect on citizen lawsuits. And I think that's a legitimate fear."

Hooper maintains that most of the revisions proposed for CEQA would cut out the statute's core justification: citizen access to the levers of power. "There is no state bureaucracy tasked with enforcing CEQA," she says. "It's designed to be enforced by citizens through the courts. We have to protect that."

Clearly, Governor Jerry Brown and many state legislators want to revamp CEQA - but in different ways and for different reasons. "One thing that strikes me as you look at the debate over CEQA is that both [developers and environmentalists] could use more certainty" about what is permissible, observes Michael H. Zischke, a partner at the San Francisco office of Cox, Castle & Nicholson and author of a leading treatise on CEQA practice.

"It's true that one person's NIMBY is another person's cause-of-the-day," he says. "But California has the most ambiguous rules of any state. There were times and places where CEQA has gone astray. When you have a project with obvious environmental benefits - such as high-speed rail - the object shouldn't be to block it. It should be to disclose impacts, identify appropriate mitigation, and make the process predictable."

Two days before the Madera hearing date last month, the plaintiffs reached a settlement with the High Speed Rail Authority. In a major concession, the authority agreed to add 25-foot buffer strips on each side of the right-of-way, allowing farmers turn-around areas for the behemoth machinery used in commercial agriculture. "It may seem like a technicality, but it's not a small thing," says Raudabaugh. "If you can't maneuver your machinery, you can't farm." (County of Madera v. Cal. High Speed Rail Auth., No. 34-2012-80001165 (stipulated judgment entered April 18, 2013).)

The authority also agreed to purchase remnant parcels created by the alignment. These relatively small plots will be offered to farmers with adjoining acreage, or will be employed as agricultural mitigation banks - basically, permanent agricultural preserves.

In addition, the pact gives the farm bureau and its four partners in the lawsuit $5 million to establish agricultural mitigation banks. And HSRA will cover nearly $1 million in attorneys fees and costs for Epstein's firm.

On the face of it, the settlement seems like a pretty good deal for farmers. But Raudabaugh isn't celebrating. If the railway goes through Madera County, its impacts will still be profound - buffer strips and mitigation banks notwithstanding. Development will most certainly burgeon all along the corridor, and that will make farming problematic. No matter how you cut it, she says, it's going to be tough for Madera farmers when the trains start running.

"We were willing to take a swing and a miss on this thing because our backs were against the wall, but we also realized that even under the best-case scenario, the most we could expect would be a rewrite of the EIR," she says.

The litigants were also mindful of Governor Brown's determination to see the project through. "The governor is so invested in this," Raudabaugh observes. "In this kind of political environment, we were in danger of being run over by the train - literally. We just concluded we couldn't stop it with this suit."

In recent weeks, however, the governor's expectations for quickly changing CEQA seem diminished. "The appetite for CEQA reform is much stronger outside the state Capitol than it is inside," he told reporters accompanying him on a trade mission to China. "This is not something you get done in a year."

Could the Madera settlement thus encourage opponents of high-speed rail to use CEQA for leverage? Epstein is certain that the statute will continue to be invoked to challenge every leg and phase of the project.

"When you have a linear project like this, the potential for wreaking havoc and upsetting lives is tremendous," he says. "This was just Madera County. There have already been challenges in the Bay Area, and there'll be more, not to mention Los Angeles and the Fresno-Bakersfield corridor. This is by no means the end."

Glen Martin is a freelance environmental writer based in Santa Rosa.


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