The California Supreme Court Clarifies Environmental Review Baselines Under the California Environmental Quality Act (CEQA)

Posted on June 30, 2010 by Berne C. Hart
The California Supreme Court recently weighed in on the critical issue of the proper baseline to be used in assessing the environmental impacts of a proposed project under the California Environmental Quality Act (CEQA). [Agencies must use a “baseline” from which to determine whether a project’s environmental effects will be “significant.”]  In Communities For a Better Environment v. South Coast Air Quality Management District, et al., 48 Cal. App. 4th 310 (2010), ConocoPhillips Company argued that the proper baseline for environmental analysis of a project at a petroleum refinery employing existing equipment should be the maximum permitted operating capacity of the equipment, even if the equipment is operating below those levels at the time the environmental analysis is commenced. The Court rejected that argument, holding that the baseline for CEQA analysis must be the “existing physical conditions in the effected area” (i.e., “real conditions on the ground”), rather than the level of development or activity that “could” or “should” have been present according to a plan or regulation. This confirms the California CEQA Guidelines requirement that the baseline consist of the physical environmental conditions in the vicinity of the project as they exist at the time the notice of preparation of the EIR is published or at the time the environmental analysis begins. 14 Cal. Code Regs. §15125(a).
 

The National Environmental Policy Act (NEPA) has similar requirements. NEPA also requires establishment of a baseline against which to compare the impacts of the proposed project. And, as with CEQA, the NEPA baseline usually consists of the pre-project environmental conditions. The Ninth Circuit Court of Appeals considered the baseline issue in American Rivers v. Federal Energy Regulatory Commission, 187 F.3d 1007 (9th Cir. 1999), where it held that use by the Federal Energy Regulatory Commission of existing environmental conditions at a hydroelectric power facility to evaluate a re-licensing proposal was the proper baseline, rather than a “theoretical reconstruction” of what the river basin would have been like if projects had never existed, as argued by several conservation and environmental organizations.

As shown in Communities For a Better Environment and American Rivers, project proponents often confuse “baseline” with the “no-action” alternative. Both CEQA and NEPA require that an EIR/EIS include an analysis of the environmental effects if the project is not approved or implemented, i.e., a “no action” alternative. However, the purpose of the no-action analysis is to compare alternatives, not to establish a baseline. The definition of the no-action alternative will vary depending on the nature of the proposed project. For some projects, the existing environment will not change if the project is not approved, and the no-action alternative and baseline will be the same. For other projects, rejection of the project will not preserve existing environmental conditions, and the no-action alternative will be different from the baseline.

Public agencies preparing environmental documents and agencies, organizations and others reviewing environmental documents should understand this important distinction between the environmental baseline and the no-action alternative.
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Ninth Circuit Rules on the Appropriate Economic Analysis Approach in Designating Critical Habitats Under the Endangered Species Act

Posted on June 28, 2010 by Berne C. Hart
The Ninth Circuit Court of Appeals recently clarified the proper approach to be applied in analyzing the economic impacts of designating critical habitats for endangered or threatened species under the Endangered Species Act (ESA). In Arizona Cattle Growers' Association v. Salazar, the Court found that the U.S. Fish and Wildlife Service (FWS) properly applied a "baseline" approach in designating approximately 8.6 million acres of Federal land as critical habitat for the Mexican Spotted Owl. The Court also found that the FSW properly interpreted “occupied” as including not only areas where owls are found, but areas where owls are likely to be present as well. See, previous blog dated June 21, 2010.

A decision to list a species as endangered or threatened is made without reference to the economic effects of the decision. In contrast, an agency must consider the economic impacts of designating critical habitat in any particular area. Under the baseline approach used by the FWS, any economic impacts of protecting a species that will occur regardless of the critical habitat designation, such the economic impacts imposed by listing the species, are treated as part of the regulatory “baseline” and are not factored into the economic analysis of effects of the critical habitat designation.

Relying on the Tenth Circuit’s decision in New Mexico Cattle Growers’ Ass’n. v U.S. Fish & Wildlife Service, Arizona Cattle Growers’ Association argued that FWS was required to apply a “co-extensive” approach, under which any economic burden imposed by the designation must be considered in the economic analysis, even if that same burden was imposed by listing the species and exists even if the area were not designated.

The Ninth Circuit expressly rejected the Tenth Circuit “co-extensive” approach, stating “. . . the economic analysis of the critical habitat designation is exactly what it sounds like and is not intended to incorporate the burden imposed by listing the species.” [In New Mexico Cattle, the Tenth Circuit held that the baseline approach is impermissible under the ESA.] The conflict between the Ninth and Tenth Circuit decisions could set the stage for review by the U.S. Supreme Court under that Court’s Rule 10, where “a United States court of appeals has entered a decision in conflict with the decision of another United States court of appeals on the same important matter.”
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Ninth Circuit Upholds U.S. Fish and Wildlife Service's Interpretation of "Occupied" Under the Endangered Species Act Critical Habitat Designation Provision

Posted on June 21, 2010 by Berne C. Hart
In a recent case, Arizona Cattle Growers Association v. Salazar, the Ninth Circuit Court of Appeals upheld a designation by the U.S. Fish and Wildlife Service of approximately 8.6 million acres of Federal land as critical habitat for the Mexican Spotted Owl, a threatened species under the Endangered Species Act (“ESA”). In making the designation, FWS interpreted the word “occupied” in the ESA’s critical habitat provision to include not only areas where owls are found, but areas where owls are likely to be present as well.

 

Arizona Cattle Growers’ Association (“Arizona Cattle”) challenged the FWS designation in the Arizona District Court on the grounds that FWS interpreted “occupied” too broadly, and that “occupied” should be interpreted more narrowly as the area in which the species “resides.”  Arizona Cattle also argued that FWS calculated the economic impacts of the designation by applying an impermissible “baseline” approach.  The District Court entered summary judgment rejecting both challenges, and Arizona Cattle appealed.

The Ninth Circuit panel divided the question of the meaning of the word “occupied,” as used in the ESA, into two prongs: 1) uncertainty - “a factor when the FWS has reason to believe that owls are present in a given area, but lacks conclusive proof of their presence”; and 2) frequency - “a factor when owls are shown to have only an intermittent presence in a given area.”  With regard to the uncertainty issue, the Court ruled that an ESA provision that an agency must determine critical habitat using “the best scientific data available” does not require that FWS “act only when it can justify its decision with absolute confidence,” but “accepts agency decisions in the face of uncertainty.”  The Court granted FWS deference in this regard, citing the standard of review used in earlier Ninth Circuit cases, “[i]n recognition of the agency’s technical expertise the court usually defers to the agency’s analysis, particularly within its area of competence.”

With regard to frequency, the Court stated that a species need not be present continuously for a habitat to be considered “occupied,” and ruled that the FWS has authority to designate as “occupied” “areas that the owl uses with sufficient regularity that it is likely to be present during any reasonable span of time.”  The Court cautioned however that the FWS could “go too far” by designating areas not used by owls as “occupied” simply because those areas are suitable for future occupancy.

The Court’s analysis and ruling on the baseline issue will be the subject of a future article that will be published on this blog.
 
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