BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 731
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          Date of Hearing:  July 1, 2013

                                Wesley Chesbro, Chair
                    SB 731 (Steinberg) - As Amended:  May 24, 2013

           SENATE VOTE  :  39-0
          SUBJECT  :  California Environmental Quality Act and sustainable  
          communities strategy

           SUMMARY  :  Makes various clarifications and revisions to CEQA,  
          including limiting the scope of review for certain residential,  
          mixed-use, and commercial "employment center" projects near  
          existing or planned transit stops.

           EXISTING LAW  :

          1)CEQA requires lead agencies with the principal responsibility  
            for carrying out or approving a proposed project to prepare a  
            negative declaration, mitigated negative declaration, or  
            environmental impact report (EIR) for this action, unless the  
            project is exempt from CEQA (CEQA includes various statutory  
            exemptions, as well as categorical exemptions in the CEQA  

          2)Requires an EIR to identify and analyze:

             a)   Significant effects on the environment that would occur  
               if the project is approved, unless the agency finds that  
               alternatives to the project or mitigation measures would  
               address the effects, or specific overriding economic,  
               legal, social, technological, or other benefits of the  
               project outweigh them.

             b)   Cumulative impacts of a project when, considered in the  
               context of environmental change occurring over time, the  
               incremental effect is cumulatively considerable.

          3)Exempts from CEQA specified residential housing projects which  
            meet criteria established to ensure the project does not have  
            a significant effect on the environment, including urban  
            infill housing projects not more than 100 units on a site not  
            more than four acres in size which is within one-half mile of  
            a major transit stop.  [SB 1925 (Sher), Chapter 1039, Statutes  


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            of 2002]

          4)Establishes abbreviated CEQA review procedures for specified  
            infill projects, where only specific or more significant  
            effects on the environment which were not addressed in a prior  
            planning-level EIR need be addressed.  An EIR for such a  
            project need not consider alternative locations, densities,  
            and building intensities or growth-inducing impacts.  Infill  
            projects may include residential, retail, commercial, transit  
            station, school, or public office building projects located  
            within an urban area.  Requires the Office of Planning and  
            Research (OPR) to develop CEQA guidelines, including statewide  
            standards to promote smart growth, reduction of greenhouse gas  
            (GHG) emissions, reduction in water use, energy efficiency  
            improvements and protection of public health.  [SB 226  
            (Simitian), Chapter 469, Statutes of 2011]

          5)Requires metropolitan planning organizations to include a  
            sustainable communities strategy (SCS), as defined, in their  
            regional transportation plans, or an alternative planning  
            strategy (APS), for the purpose of reducing GHG emissions,  
            aligns planning for transportation and housing, and creates  
            specified incentives for the implementation of the strategies,  
            including CEQA exemption or abbreviated review for eligible  
            residential projects.  [SB 375 (Steinberg), Chapter 728,  
            Statutes of 2008]  

          6)Authorizes judicial review of CEQA actions taken by public  
            agencies, following the agency's decision to carry out or  
            approve the project.  Challenges alleging improper  
            determination that a project may have a significant effect on  
            the environment, or alleging an EIR doesn't comply with CEQA,  
            must be filed in the Superior Court within 30 days of filing  
            of the notice of approval.  

          7)Establishes that a record of proceeding includes, but is not  
            limited to, all application materials, staff reports,  
            transcripts or minutes of public proceedings, notices, written  
            comments, and written correspondence prepared by or submitted  
            to the public agency regarding the proposed project.   
            Establishes a procedure for the preparation, certification,  
            and lodging of the record of proceedings.  

           THIS BILL  :


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          1)Requires OPR, on or before July 1, 2014, to propose revisions  
            to the CEQA Guidelines to establish thresholds of significance  
            (to determine if an environmental effect justifies preparation  
            of an EIR) for noise, transportation, and parking impacts of  
            residential, mixed-use residential, or employment center  
            projects within transit priority areas.  Requires the  
            thresholds to be based upon a project's proximity to a  
            multi-modal transportation network, its overall transportation  
            accessibility, and its proximity to a diversity of land uses.

             a)   Defines "employment center project" as a project located  
               on property zoned for commercial uses, with a floor area  
               ratio of no less than 0.75, located within one-half mile of  
               a major transit stop or high-quality transit corridor  
               included in a regional transportation plan.

             b)   Defines "transit priority area" as an area within  
               one-half mile of a major transit stop that is either  
               existing or planned, if the planned stop is scheduled to be  
               completed with the 20-year planning horizon of a specified  
               federal transportation plan.

             c)   Provides that "aesthetic" impacts of projects subject to  
               this section shall not be considered significant impacts on  
               the environment for purposes of CEQA, while also stating  
               that the authority of a lead agency to consider aesthetic  
               impacts pursuant to local design review ordinances or other  
               discretionary powers in not affected.  (Section 9)

          2)For purposes of the existing exemption for a residential  
            development project that is consistent with a specific plan  
            for which an EIR has been prepared, clarifies that "new  
            information" which would invalidate the exemption does not  
            include "argument, speculation, unsubstantiated opinion or  
            narrative, evidence that is clearly inaccurate or erroneous,  
            or evidence of social or economic impacts that do not  
            contribute to, or are not caused by, physical impacts on the  
            environment" (making the meaning of "new information"  
            consistent with the existing meaning of "substantial evidence"  
            in CEQA).  (Section 5)

          3)Requires, when a public agency finds that specific economic,  
            legal, social, technological, or other considerations make  
            infeasible the mitigation measures or alternatives identified  
            in the EIR and finds that specific overriding economic, legal,  


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            social, technological, or other benefits of the project  
            outweigh the significant effects on the environment, that the  
            agency's findings be published for review for at least 15 days  
            prior to approval of the project, and provides specified  
            procedures for publication and transmittal to specified  
            parties.   (Section 7)

          4)Requires a lead agency to prepare and publish an annual report  
            on a project's compliance with mitigation measures adopted  
            pursuant to CEQA.  (Section 8)

          5)Provides that the statute of limitations for bringing a CEQA  
            lawsuit may be tolled for successive periods up to four years  
            each by agreement of the parties (petitioner, public agency  
            and real party in interest/applicant).  (Section 10)

          6)For certain projects and upon a project applicant's request,  
            authorizes a lead agency to prepare concurrently with the  
            administrative process the record of proceedings that would be  
            used in a judicial challenge to an agency's action or decision  
            under CEQA.  Specifies procedures for preparation and  
            publication of the record.  Requires the project applicant to  
            reimburse the lead agency for the costs incurred to prepare  
            the record.  Applies to projects determined to be of  
            statewide, regional, or area-wide environmental significance;  
            infill projects for which an EIR was certified for a city or  
            county's planning level decision; a project implementing a  
            sustainable communities strategy pursuant to SB 375; or any  
            other project for which the lead agency consents to prepare  
            the record of proceedings pursuant to the above requirements.   
            (Sections 11-13)

          7)Requires the Attorney General to report annually to the  
            Legislature regarding CEQA lawsuits, including the parties  
            involved, the type of action and violation alleged, and the  
            disposition of the case.  (Section 14)

          8)Requires, when a court finds that a public agency has not  
            complied with CEQA, that the court issue a peremptory writ of  
            mandate specifying what action is necessary to comply.   
            Requires the writ include only those mandates necessary to  
            achieve compliance and only those project activities in  
            noncompliance, and permits a writ to direct the agency to  
            revise only those portions of a CEQA document found not to be  
            in compliance, provided the non-compliant issues are severable  


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            from the remainder of the project.  (Section 15)

          9)Declares the intent of the Legislature to appropriate $30  
            million to the Strategic Growth Council to provide competitive  
            grants to local agencies for planning activities related to  
            implementing SB 375.  (Section 16)

          10)Authorizes the applicant for a renewable energy project to  
            present to the public agency the onsite or offsite benefits of  
            the project.  (Section 6)

          11)Establishes, until January 1, 2017, the position of "Advisor  
            on Renewable Energy Facilities" in the office of the Governor.  
             (Sections 3-4)

          12)Declares the intent of the Legislature regarding various CEQA  
            issues, some of which are addressed in the operative  
            provisions of the bill and some of which are not.  (Section 1)

          13)Titles the bill the "CEQA Modernization Act of 2013".   
            (Section 2)

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee:  One-time costs of $73,000 for FY 13-14 and $109,000  
          annually thereafter from the General Fund for the Department of  
          Justice for annual reporting requirements.  One-time costs of  
          $500,000 to $750,000 from the General Fund for the Office of  
          Planning and Research (OPR) to develop threshold standards for  
          noise, transportation, and parking impacts.  Ongoing costs of  
          approximately $120,000 for the creation of the Advisor on  
          Renewable Energy Facilities within the Office of the Governor.   
          Cost pressure of $30 million to the General Fund for local  
          assistance grants for planning activities administered by the  
          Strategic Growth Council.
          COMMENTS  : 

           1)Background.   CEQA provides a process for evaluating the  
            environmental effects of applicable projects undertaken or  
            approved by public agencies.  If a project is not exempt from  
            CEQA, an initial study is prepared to determine whether the  
            project may have a significant effect on the environment.  If  
            the initial study shows that there would not be a significant  
            effect on the environment, the lead agency must prepare a  
            negative declaration.  If the initial study shows that the  


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            project may have a significant effect on the environment, the  
            lead agency must prepare an EIR.  A lead agency must base its  
            determination of significant effects on substantial evidence.

            Generally, an EIR must accurately describe the proposed  
            project, identify and analyze each significant environmental  
            impact expected to result from the proposed project, identify  
            mitigation measures to reduce those impacts to the extent  
            feasible, and evaluate a range of reasonable alternatives to  
            the proposed project.  Prior to approving any project that has  
            received environmental review, an agency must make certain  
            findings.  If mitigation measures are required or incorporated  
            into a project, the agency must adopt a reporting or  
            monitoring program to ensure compliance with those measures.

            According to the author's office, this bill is a comprehensive  
            reform measure to strengthen CEQA's protection of the state's  
            environment and residents while modernizing the law to aid  
            California's economic growth.  The author states, "today's  
            bill is the result of months of discussion and negotiation  
            with key representatives from the business, environmental, and  
            organized labor communities."  These changes were key issues  
            identified by a CEQA working group of experts brought together  
            by Senator Steinberg this past fall.  The author states,  
            "taken together they will help reduce litigation and delays  
            from CEQA while protecting the legitimate uses of the  

           2)Intent section doesn't match the bill.   The purpose and  
            relevance of the introductory intent section of this bill is  
            unclear.  Some of the intent subdivisions describe provisions  
            which are not in the operative sections of the bill [i.e.,  
            subdivisions (a), (b) and (f)].  Others essentially restate  
            provisions which are in the bill without adding any additional  
            meaning [i.e., subdivisions (c), (d), (e) and (g)].   The  
            author and the committee may wish to consider  striking or  
            revising these subdivisions so the intent section is more  
            germane to rest of the bill.

           3)Conclusion that projects near existing or planned transit  
            stops are always "environmentally beneficial" is  
            unsubstantiated.   In Section 9, this bill labels a wide range  
            of residential, mixed-use and commercial "employment center"  
            projects as "environmentally beneficial" so long as the  
            project may be located within one-half mile of a major transit  


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            stop, whether the stop is existing, or planned up to 20 years  
            in the future.  Apart from being labeled "environmentally  
            beneficial" in the statute, the specific relief offered to  
            these projects seems modest and a little vague.  An eligible  
            project's noise, transportation and parking impacts may be  
            measured against statewide thresholds of significance  
            established by OPR, rather than local standards, so long as  
            the local agency does not elect to apply local standards.  In  
            addition, aesthetic impacts are specifically barred from  
            consideration under CEQA.  The idea that local noise, traffic  
            and aesthetic impacts could in some cases be disregarded seems  
            to be based on the proposition that these projects will occur  
            on infill sites in urban areas, which are already impacted by  
            noise and traffic, and that aesthetic impacts are subjective  
            and not an environmental impact.  However, the application of  
            these provisions is not limited to infill sites, or even urban  
            areas.  Nor is it tied to compliance with the "smart growth"  
            planning procedures of SB 375 or the environmental performance  
            standards for infill projects adopted pursuant to SB 226.  The  
            type of residential or commercial projects that might be  
            eligible is not defined, except that commercial projects must  
            have a floor area ratio of least 0.75, which excludes  
            low-intensity "sprawl" development (e.g. single story/large  
            parking lot).  These minimal conditions do not seem adequate  
            to support the conclusion that these projects should always be  
            spared from consideration of local noise and transportation  
            impacts.   The author and the committee may wish to consider   
            additional limits on the application of this section, such as  
            limiting to infill sites in urban areas, reducing the 20-year  
            limit for planned transit stops, excluding parking impacts,  
            and clarifying that aesthetic impacts do not include impacts  
            on historical or cultural resources.

           4)Where are the parties?   Many of the parties that normally  
            engage on CEQA issues, including developers, environmental  
            advocates and labor unions, have not filed letters or  
            otherwise provided substantive comments on the bill.  A  
            coalition of local government agencies criticize the bill for  
            not doing enough to streamline CEQA, while imposing new  
            burdens on lead agencies, and note that several of the bill's  
            provisions essentially confirm existing law, while potentially  
            adding confusion.  Historic preservation advocates object to  
            removing consideration of aesthetics for projects in transit  
            priority areas because they view consideration of aesthetics  
            in CEQA review as important to protect historic and cultural  


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           5)Technical and clarifying amendments.   The author has a variety  
            of technical and clarifying amendments, which may be presented  
            at the hearing for adoption in conjunction with any committee  
            amendments.  These include revisions to the intent section to  
            align it with the operative sections, relocation of Section  
            6's provisions from Section 21080 to 21081, assigning the CEQA  
            litigation report to the California Research Bureau, rather  
            than the Attorney General, and other minor/non-substantive  

          6)Double referral.  This bill has been double-referred to the  
            Assembly Local Government Committee.


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          City of Sacramento
          Civil Justice Association of California
          California Preservation Foundation
          Napa Design Partners
          Pasadena Heritage
          Public Works Coalition (unless amended):
               Association of California Healthcare Districts
               Association of California School Administrators
               California Association of Sanitation Agencies
               California Association of School Business Officials
               California Special Districts Association
               California State Association of Counties
               California State University
               Coalition for Adequate School Housing
               Los Angeles Unified School District
               Small School Districts' Association
               Rural County Representatives of California
               Three Valleys Municipal Water District
               Urban Counties Caucus

           Analysis Prepared by  :  Lawrence Lingbloom / NAT. RES. / (916)