Developers see the California Environmental Quality Act as some sort of Great Satan, the source of pretty much everything that’s wrong with the state. CEQA halts progress. CEQA means huge delays and added expense in housing construction, which is why rents are so high. CEQA is crippling the state’s economy.

The governor isn’t much better: He once said that there’s no such thing as CEQA reform that he didn’t like.

CEQA doesn't add much to the cost of development -- and provides critical environmental justice
CEQA doesn’t add much to the cost of development — and provides critical environmental justice

But a new study shows that much of the demonization of CEQA is based on nonsense. The law hasn’t damaged the state’s economy. It hasn’t hampered development. It hasn’t added big costs to housing.

In fact, the study uses San Francisco as a case study and shows that CEQA is hardly ever an impediment to development.

The study, commissioned by the Rose Foundation and prepared by BAE Economics, concludes that

— There aren’t that many CEQA lawsuits. In the entire state of California, the number of cases filed under the law is fewer than 200 a year – and that hasn’t increased at all since 2002, while the state’s population has grown dramatically. The actual rate of lawsuits is below one percent of all projects that were subject to CEQA review.

— In San Francisco, where critics say Nimbys rule the day and CEQA is a huge impediment, only 14 projects in the past three years have required environmental impact reports – while development has exploded. The city “routinely uses the streamlining procedures built into CEQA statues and guidelines,” the study says. If anything, San Francisco is a case study in how CEQA is NOT used to delay development, and how city agencies allow projects to go forward with minimal obstruction.

— CEQA doesn’t cost developers a lot of money or add significantly to the cost of construction. Environmental review in San Francisco adds as little as one quarter of one percent and a maximum of one half of one percent to development costs.

— CEQA is not a major brake on growth; in fact, the study concludes,

California’s strong framework of environmental protections, including CEQA, does not constrain growth and indeed helps ensure the state’s future sustainability.

CEQA is part of a framework of laws passed in the late 1960s and early 1970s, in the early days of the US environmental movement. Richard Nixon signed the National Environmental Policy Act into law in 1969 with bipartisan support and very little business opposition.

The laws seemed pretty toothless to industrial lobbyists; like CEQA, signed into law by Gov. Ronald Reagan in 1970, the legislation didn’t halt any sort of development or put any new rules on land use. It simply said that any time a project might have an impact on the environment, that impact should be studied, and policy makers should consider that study and any appropriate mitigations.

In fact, nothing in either law prevented policy makers from approving a project that was bad for the environment. The rules only said that before they made that decision, elected officials had to study the impacts, make that study public, and consider alternatives and mitigations. After doing all that, the federal government, or a local city council, had every right to say: Never mind the impacts. We want the development anyway.

But NEPA and CEQA changed environmental law forever, in a way that only a few people understood at the time.

In the 1960s, the emerging environmental movement was running into trouble in the courts: Activists tried to sue to stop major developments in rural and undeveloped wilderness areas, and they ran into a problem called “standing.”

Under federal law, and state laws that derived from it, you weren’t allow to sue unless you could prove that you were damaged. Want to stop a development that would ruin a pristine ecosystem? Unless you owned land that would be impacted, you were out of luck.

A couple of key court decisions in the late 1960s gave environmentalists the ability to say that their rights to hike and enjoy the wilderness counted as standing, but the issue was still a huge impediment.

Until NEPA and CEQA.

Under those laws, every citizen had the right to an honest assessment of the environmental risks of a project. If an environmental review was lacking, you needed no other standing; anyone could go to court and challenge an EIR. No state agency was assigned to enforce CEQA; it was the classic case of a private right of action defining the enforcement of the law.

 

And over the years, that right has been transformative. Thousands of terrible projects that could have gone forward have been slowed down by NEPA and CEQA lawsuits; in many cases, the projects were ultimately approved, but only after the environmentalists were able to win changes and mitigations that should have been part of the deal in the first place.

CEQA changed San Francisco environmental and planning politics in the 1980s. The city had been routinely approving vast numbers of new highrise office buildings, each one treated as an individual project, with no concern for the fact that all of them together would create havoc for Muni, would clog traffic, would cause huge increases in energy use, water and sewer issues, and impact the daily lives of people in the city.

Sue Hestor, attorney for San Franciscans for Reasonable Growth, sued, saying that the city had to take into account not just one project but what all of them put together would do. She won a landmark decision by the state Court of Appeal, concluding that the EIRs done by the city were woefully inadequate. From that point on, environmental review was held to a higher standard and was a part of long-term city planning.

Developers have been trying to gut CEQA for decades, and have won all sorts of changes and exemptions in the Legislature. Still, the law remains one of the most powerful tools for ensuring that policy decisions are made with full public review of the environmental impacts.

It’s not perfect. It has only limited teeth – elected officials can and very often do ignore the results of EIRs and make approve bad developments anyway. But it’s critical to the planning process.

According to the study,

A broad look at the evidence shows that litigation under CEQA has not increased since 2002, a fact that rebuts assertions that the vast majority of projects in California are now subject to lawsuits.  Furthermore, CEQA has been amended to institute streamlining procedures, and the evidence from San Francisco indicates that a very high percentage of approvals are subject to exemptions from CEQA, and that the number of EIRs prepared is small.

 

The study looked specifically at San Francisco, where we’ve heard complaints for years that he EIR process is too cumbersome and that “streamlining” review would cut down the cost of development.

Between 2013 and 2015, the study found, San Francisco planers received 127 projects that were eligible for CEQA review. Of those, only 14 wound up needing a full EIR.

In fact, 75 of those projects, including some fairly substantial developments, never had to undergo and EIR process because of the “Community Plan Exemption.” Projects in any area that’s undergone a detailed local planning process, including an EIR, and be totally exempt from CEQA review – meaning that thousands of housing units have been and can be built in the area under the Eastern Neighborhoods Plan with no project-specific review.

The study notes that CEQA has been

a powerful tool for communities subjected to environmental injustice, and advocates for these communities frequently rely on CEQA to protect residents from public health impacts.  The value of CEQA, especially to address cumulative impacts, means that environmental justice advocates have taken a strong stand against many aspects of proposed CEQA reforms including the recent proposal to streamline CEQA review by exempting certain “by-right” residential projects.

We also hear that CEQA makes affordable housing more expensive. But there’s data on that:

The Affordable Housing Cost Study employs a regression analysis to model project characteristics potentially influencing development costs in 400 newly-constructed affordable multifamily projects in California that received either 4 or 9 percent Low Income Housing Tax Credits (LIHTCs) between 2001 and 2011.  The report presents the major components of total development cost (excluding land cost) across the 400 affordable development projects analyzed.  In descending order of magnitude, the largest cost category was construction (69 percent).  Other sources of development cost include demolition and site preparation (eight percent); development fees (seven percent); permits and development impact fees (six percent); architect, engineering, and site surveys (four percent), acquisition (one percent), offsite improvements (one percent) and “other costs” (four percent).

CEQA would be a part of the “other costs.” Less than four percent.

In Richmond, the study notes, a senior housing project costing $110 million spent $300,000 on CEQA compliance. That’s 0.3 percent. And that process uncovered critical air quality and toxic contamination issues that were later mitigated.

This is a critical document, mostly ignored by the local news media. It directly contradicts nearly all of the attacks on CEQA we’ve been hearing from developers (and the governor), and shows why the law is so important, effective – and relatively free from abuse.

Required reading for SF’s planning community.