BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  June 13, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          SB  
          734 (Galgiani) - As Amended May 19, 2016


          SENATE VOTE:  37-0 (not relevant)


          SUBJECT:  Environmental quality:  Jobs and Economic Improvement  
          Through Environmental Leadership Act of 2011


          SUMMARY:  Extends for two years the expedited California  
          Environmental Quality Act (CEQA) judicial review procedures  
          established by the Jobs and Economic Improvement Through  
          Environmental Leadership Act (AB 900, Chapter 354, Statutes of  
          2011).


          EXISTING LAW:   


          1)Pursuant to CEQA, requires a lead agency with the principal  
            responsibility for carrying out or approving a proposed  
            discretionary project to evaluate the environmental effects of  
            its action and prepare a negative declaration, mitigated  
            negative declaration, or environmental impact report (EIR).   
            If an initial study shows that the project may have a  
            significant effect on the environment, the lead agency must  
            prepare an EIR.  CEQA authorizes judicial review of the  
            agency's decision to carry out or approve the project.   








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            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.  The  
            courts are required to give CEQA actions preference over all  
            other civil actions.  

          2)Pursuant to AB 900, establishes procedures for expedited  
            judicial review (i.e., requiring the courts to resolve  
            lawsuits within 270 days) for "environmental leadership"  
            projects certified by the Governor and meeting specified  
            conditions, including LEED silver-certified infill site  
            projects, clean renewable energy projects, and clean energy  
            manufacturing projects.

             a)   Defines "environmental leadership" project as a CEQA  
               project that is one of the following:

               i)     A residential, retail, commercial, sports, cultural,  
                 entertainment, or recreational use project that is  
                 certified as LEED silver or better by the United States  
                 Green Building Council and, where applicable, that  
                 achieves a 10% greater standard for transportation  
                 efficiency than for comparable projects. 

                  (1)       Requires that these projects be located on an  
                    infill site. 

                  (2)       Requires a project that is within a  
                    metropolitan planning organization for which a  
                    sustainable communities strategy (SCS) or alternative  
                    planning strategy (APS) is in effect, to be consistent  
                    with specified policies in either the SCS or APS,  
                    which, if implemented, would achieve greenhouse gas  
                    emission (GHG) reduction targets.

               ii)    A clean renewable energy project that generates  
                 electricity exclusively through wind or solar, but not  
                 including waste incineration or conversion.








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               iii)   A clean energy manufacturing project that  
                 manufactures products, equipment, or components used for  
                 renewable energy generation, energy efficiency, or for  
                 the production of clean alternative fuel vehicles.

             b)   Allows a person proposing to construct a leadership  
               project to apply to the Governor for certification that the  
               leadership project is eligible for streamlining.  Requires  
               the person to supply evidence and materials that the  
               Governor deems necessary to make a decision on the  
               application.  Requires any evidence or materials be made  
               available to the public at least 15 days before the  
               Governor certifies a project pursuant to AB 900.

             c)   Authorizes the Governor to certify a leadership project  
               if the Governor finds the project meets all of the  
               following conditions:

               i)     The project will result in a minimum investment of  
                 $100 million in California upon completion of  
                 construction.

               ii)    The project creates high-wage, highly skilled jobs  
                 that pay prevailing wages and living wages, provides  
                 construction jobs and permanent jobs for Californians,  
                 and helps reduce unemployment.

               iii)   The project does not result in any net additional  
                 GHG emissions, including emissions from employee  
                 transportation, as determined by the Air Resources Board  
                 pursuant to the California Global Warming Solutions Act  
                 of 2006.

               iv)    The project applicant has entered into a binding and  
                 enforceable agreement that all mitigation measures  
                 required under CEQA shall be conditions of approval of  
                 the project, and those conditions will be fully  
                 enforceable by the lead agency or another agency  








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                 designated by the lead agency.  In the case of  
                 environmental mitigation measures, the applicant agrees,  
                 as an ongoing obligation, that those measures will be  
                 monitored and enforced by the lead agency for the life of  
                 the obligation.

               v)     The project applicant agrees to pay the costs of the  
                 Court of Appeal in hearing and deciding any case,  
                 including payment of the costs for the appointment of a  
                 special master if deemed appropriate by the court, in a  
                 form and manner specified by the Judicial Council.

               vi)    The project applicant agrees to pay the costs of  
                 preparing the administrative record for the project  
                 concurrent with review and consideration of the project  
                 pursuant to CEQA, in a form and manner specified by the  
                 lead agency for the project.

             d)   Requires the Governor, prior to certifying a project, to  
               make a determination that each of the conditions specified  
               above has been met.  These findings are not subject to  
               judicial review.

             e)   If the Governor determines that a leadership project is  
               eligible for streamlining, requires the Governor to submit  
               that determination, and any supporting information, to the  
               Joint Legislative Budget Committee (JLBC) for review and  
               concurrence or non-concurrence.

             f)   Requires the JLBC to concur or non-concur in writing  
               within 30 days of receiving the Governor's determination.

             g)   Deems the leadership project certified if the JLBC fails  
               to concur or non-concur on a determination by the Governor  
               within 30 days of the submittal.

             h)   Authorizes the Governor to issue guidelines regarding  
               application and certification of projects pursuant to AB  
               900.  These guidelines are not subject to the rulemaking  








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               provisions of the Administrative Procedure Act.

             i)   Requires the Judicial Council to adopt a rule of court  
               to establish procedures that require resolution within 270  
               days, including any appeals, of a lawsuit challenging the  
               certification of the EIR or any project approvals for a  
               certified environmental leadership project.

             j)   Prohibits AB 900 from applying to a leadership project  
               if the applicant fails to notify a lead agency prior to the  
               release of the draft EIR for public comment.  

             aa)  Sets requirements for preparation and certification of  
               the administrative record for a leadership project  
               certified by the Governor.

             bb)  Requires the draft and final EIR to include a specified  
               notice in no less than 12-point type regarding the draft  
               and final EIR being subject to AB 900.  

             cc)  Provides that provisions of AB 900 are severable.  

             dd)  Provides that nothing in AB 900 affects the duty of any  
               party to comply with CEQA, except as otherwise provided in  
               AB 900.

             ee)  Prohibits AB 900 from applying to a leadership project  
               if the Governor does not certify the project prior to  
               January 1, 2016.  

             ff)  Provides that certification of the leadership project  
               expires and is no longer valid if the lead agency fails to  
               approve the project prior to January 1, 2017.  

             gg)  Requires the Judicial Council to report to the  
               Legislature on or before January 1, 2017, on the effects of  
               AB 900 on the administration of justice.

             hh)  Sunsets January 1, 2017. 








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          THIS BILL:

          1)Extends the operation of AB 900 by two years, so that the  
            Governor must certify a project prior to January 1, 2018, the  
            project must be approved prior to January 1, 2019, and AB 900  
            sunsets January 1, 2019.


          2)Adds the following prevailing wage conditions and enforcement  
            provisions:


             a)   Requires contractors and subcontractors to pay to all  
               construction workers employed in the execution of the  
               project at least the general prevailing rate of per diem  
               wages.

             b)   Provides that this obligation may be enforced by the  
               Labor Commissioner through the issuance of a civil wage and  
               penalty assessment pursuant to relevant provisions of the  
               Labor Code, unless all contractors and subcontractors  
               performing work on the project are subject to a project  
               labor agreement that requires the payment of prevailing  
               wages and provides for enforcement through an arbitration  
               procedure.

          FISCAL EFFECT:  Unknown


          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  








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            effect on the environment, the lead agency must prepare a  
            negative declaration.  If the initial study shows that the  
            project may have a significant effect on the environment, the  
            lead agency must prepare an EIR.


            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.  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.


            CEQA actions taken by public agencies can be challenged in  
            Superior Court once the agency approves or determines to carry  
            out the project.  CEQA appeals are subject to unusually short  
            statutes of limitations.  Under current law, court challenges  
            of CEQA decisions generally must be filed within 30 to 35  
            days, depending on the type of decision.  The courts are  
            required to give CEQA actions preference over all other civil  
            actions.  The petitioner must request a hearing within 90 days  
            of filing the petition and, generally, briefing must be  
            completed within 90 days of the request for hearing.  There is  
            no deadline specified for the court to render a decision.


            In 2011, AB 900 (Buchanan) and SB 292 (Padilla) established  
            expedited CEQA judicial review procedures for a limited number  
            of projects.  For AB 900, it was large-scale projects meeting  
            extraordinary environmental standards and providing  
            significant jobs and investment.  For SB 292, it was a  
            proposed downtown Los Angeles football stadium and convention  
            center project achieving specified traffic and air quality  
            mitigations.  For these eligible projects, the bills provided  
            for original jurisdiction by the Court of Appeal and a  








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            compressed schedule requiring the court to render a decision  
            on any lawsuit within 175 days.  This promised to reduce the  
            existing judicial review timeline by 100 days or more, while  
            creating new burdens for the courts and litigants to meet the  
            compressed schedule.  AB 900's provision granting original  
            jurisdiction to the Court of Appeal was invalidated in 2013 by  
            a decision in Alameda Superior Court in Planning and  
            Conservation League v. State of California.  The stadium  
            project subject to SB 292 has not proceeded.  In 2013, SB 743  
            (Steinberg) established special CEQA procedures modeled on SB  
            292 for the Sacramento Kings arena project.  Like SB 292, SB  
            743 applied to a single project and included specified traffic  
            and air quality mitigations.  CEQA lawsuits were filed against  
            the Kings arena, and the lawsuits, including appeals, were  
            resolved 267 days after certification of the record.


            To date, six projects have been certified under AB 900.  Only  
            one, the proposed Golden State Warriors arena and related  
            development at Mission Bay in San Francisco, has been  
            challenged under CEQA.  The case, Mission Bay Alliance et al.  
            v Office of Community Investment and Infrastructure, was filed  
            March 11, 2016.  A hearing is scheduled June 17 in San  
            Francisco Superior Court.


          2)Author's statement:


               SB 734 extends the Environmental Leadership Development  
               Projects application process and adds to existing law that  
               if the project is certified, contractors and subcontractors  
               shall pay prevailing wage to its workers if a project labor  
               agreement is not in place (AB 900 always required payment  
               of prevailing wages-SB 734 just strengthens it).  SB 734  
               also extends the sunset of this chapter to 2019.  It also  
               states that if, prior to January 1, 2019, a lead agency  
               fails to approve a project certified by the Governor  
               pursuant to this chapter, the certification expires.








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               SB 734 would help large job producing green projects to  
               avoid significant delays in breaking ground.  Litigation  
               for such projects is currently taking up to 3 years, not  
               including appeals, and jobs and housing are not being  
               created or are being delayed due to this process.


          3)The six AB 900 projects.  The deadline for AB 900  
            certification under current law has passed (it was January 1,  
            2016).  The following six projects were certified prior to AB  
            900's expiration:


               a)     McCoy Solar Energy Project in Riverside County.


               b)     Apple Campus 2 in Cupertino.


               c)     Soitec Solar Energy Project in San Diego County.


               d)     8150 Sunset Boulevard, a mixed-use commercial and  
                 residential project in Hollywood.


               e)     Event Center and Mixed-Use Development at Mission  
                 Bay Blocks (i.e., Warriors Arena) in San Francisco.


               f)     Qualcomm Stadium Reconstruction Project in San  
                 Diego.


            To date, it appears that only the Apple Campus 2 has received  
            final approval and proceeded to construction as proposed.









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          4)More projects in the wings.  Although this bill provides a  
            blanket extension of AB 900 and is not specific to any  
            particular projects, proponents have identified four projects  
            that would apply for AB 900 certification if the bill is  
            enacted:


               a)     6701 Sunset/Crossroads in Hollywood - Nine new  
                 mixed-use buildings, including residential, hotel,  
                 commercial office, retail, and restaurant uses, including  
                 up to 308 hotel rooms and 950 residential units, 84 of  
                 which will be affordable to low-income households (to  
                 replace 84 rent-controlled units the project will  
                 demolish).


               b)     Yucca-Argyle Project in Hollywood - Mixed-use  
                 project with hotel, residential, and commercial uses,  
                 including 260 hotel rooms and 191 residential units, 39  
                 of which will be affordable to low-income households.


               c)     Barlow Hospital Project in Echo Park - Hospital  
                 replacement and residential development on a 25-acre site  
                 near Dodgers Stadium, including 400 new single-family  
                 homes, with no commitments to affordable housing to date.


               d)     Hollywood Central Park - A 38-acre regional street  
                 level park created by capping US 101 between Hollywood  
                 and Santa Monica Boulevards.


          5)Should the AB 900 model be extended?  It's an open question  
            whether the idea of limiting the scope and time of judicial  
            review of favored projects was ever good policy, even for one  
            project.  The practical benefit of this approach to developers  
            is debatable, and it's unclear whether that benefit outweighs  








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            the potential sacrifice to effective environmental review and  
            the increased burden on the courts.  The only project that  
            seems to have used and possibly benefited from the judicial  
            review procedures enacted since 2011 is the Sacramento Kings  
            arena project.  It should be noted that SB 743 required the  
            Kings arena to be certified Leadership in Energy and  
            Environmental Design (LEED) Gold, as well as minimize traffic  
            and air quality impacts through project design or mitigation  
            measures, including reducing to at least zero the net GHG  
            emissions from private automobile trips to the arena, achieve  
            reductions in GHG emissions from automobiles and light trucks  
            that will exceed the GHG emission reduction targets for 2020  
            and 2035 adopted for the Sacramento region pursuant to SB 375,  
            and achieve a 15% reduction in vehicle-miles traveled (VMT)  
            per attendee.  In contrast, AB 900 requires the lower LEED  
            Silver certification, a 10% improvement in transportation  
            efficiency over comparable projects, and zero net GHG  
            emissions, with no requirement that the GHG emission  
            reductions be from local sources.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Chamber of Commerce




          Opposition


          California League of Conservation Voters









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          Judicial Council of California


          Sierra Club California




          Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)  
          319-2092