BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 1306 (Stone)
Version: March 28, 2016
Hearing Date: April 26, 2016
Fiscal: No
Urgency: No
TH
SUBJECT
Consumer Remedies: Attorney's Fees and Litigation Costs
DESCRIPTION
Existing law, the California Environmental Quality Act (CEQA),
requires a public agency to prepare, or cause to be prepared,
and to certify the completion of, an environmental impact report
(EIR) on a project that it proposes to carry out or approve that
may have a significant effect on the environment. Existing law
authorizes parties to bring an action or proceeding to attack,
review, set aside, void, or annul the acts or decisions of a
public agency on the grounds of noncompliance with CEQA, and
authorizes a court to award attorneys' fees to a successful
party in any action which has resulted in the enforcement of an
important right affecting the public interest.
This bill provides that in litigation pertaining to CEQA that is
filed pursuant to the Consumer Legal Remedies Act (Civ. Code Sec
1750 et seq.), the court shall award court costs and attorney
fees to a prevailing party in the action.
BACKGROUND
Enacted in 1970, the California Environmental Quality Act (CEQA)
requires state and local agencies (public agencies) to follow a
set protocol to disclose and evaluate the significant
environmental impacts of proposed projects and to adopt feasible
measures to mitigate those impacts. CEQA itself applies to
"projects" undertaken or requiring approval by public agencies,
and, if more than one agency is involved, CEQA requires one of
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the agencies to be designated as the "lead agency." The
environmental review process required by CEQA consists of: (1)
determining if the activity is a project; (2) determining if the
project is exempt from CEQA; and (3) performing an initial study
to identify the environmental impacts and, depending on the
findings, preparing either a Negative Declaration (for projects
with no significant impacts), a Mitigated Negative Declaration
(for projects with significant impacts, but that are revised in
some form to avoid or mitigate those impacts), or an
Environmental Impact Report (for projects with significant
impacts).
An Environmental Impact Report (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 pertaining to the project's environmental
impact and any associated mitigation measures. If mitigation
measures are required or incorporated into a project, the public
agency must adopt a reporting or monitoring program to ensure
compliance with those measures.
To enforce the requirements of CEQA, a civil action may be
brought to attack, review, set aside, void or annul the acts or
decisions of a public agency for noncompliance with the act.
Like many other environmental laws, CEQA is enforced primarily
through private litigation, not through oversight by a
governmental agency. Before a petitioner can file a lawsuit
alleging noncompliance with CEQA, he or she must first exhaust
administrative remedies, which generally requires the petitioner
to submit the alleged grounds of noncompliance to the public
agency before it makes a final decision on a project.
Typically, a CEQA petitioner must finance his or her own costs
during litigation, but existing law does authorize a reviewing
court to award attorney fees to a prevailing plaintiff.
This bill seeks to alter CEQA's existing fee-shifting provisions
to a "loser pays" arrangement, requiring a court to award costs
and attorney fees to the prevailing party in an action.
CHANGES TO EXISTING LAW
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Existing law , the California Environmental Quality Act (CEQA),
requires a public agency to prepare, or cause to be prepared,
and to certify the completion of, an environmental impact report
(EIR) on a project that it proposes to carry out or approve that
may have a significant effect on the environment, or to adopt a
negative declaration if it finds that the project will not have
that effect. (Pub. Resources Code Sec. 21100 et seq.)
Existing law provides that an action or proceeding to attack,
review, set aside, void, or annul the acts or decisions of a
public agency on the grounds of noncompliance with CEQA may be
commenced when, among other things, it is alleged that:
a public agency is carrying out or has approved a project that
may have a significant effect on the environment without
having determined whether the project may have a significant
effect on the environment;
a public agency has improperly determined whether a project
may have a significant effect on the environment;
an environmental impact report prepared by, or caused to be
prepared by, a public agency does not comply with CEQA;
a public agency has improperly determined that a project is
not subject to CEQA; or
another act or omission of a public agency does not comply
with CEQA. (Pub. Resources Code Sec. 21167.)
Existing law states that an action or proceeding to attack,
review, set aside, void, or annul the acts or decisions of a
public agency on the grounds of noncompliance with CEQA shall
not be brought unless the alleged grounds for noncompliance were
presented to the public agency orally or in writing by any
person during the public comment period provided by CEQA or
prior to the close of the public hearing on the project before
the issuance of the notice of determination. (Pub. Resources
Code Sec. 21177(a).)
Existing law provides that upon motion, a court may award
attorney fees to a successful party against one or more opposing
parties in any action which has resulted in the enforcement of
an important right affecting the public interest if: (a) a
significant benefit, whether pecuniary or nonpecuniary, has been
conferred on the general public or a large class of persons, (b)
the necessity and financial burden of private enforcement, or of
enforcement by one public entity against another public entity,
are such as to make the award appropriate, and (c) such fees
should not in the interest of justice be paid out of the
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recovery, if any. (Code Civ. Proc. Sec. 1021.5.)
Existing law states that, with respect to actions involving
public entities, the provision above applies to allowances
against, but not in favor of, public entities. (Code Civ. Proc.
Sec. 1021.5.)
Existing law provides that, except as otherwise expressly
provided by statute, a prevailing party is entitled as a matter
of right to recover costs in any action or proceeding. (Code
Civ. Proc. Sec. 1032.)
This bill states that in litigation pertaining to the California
Environmental Quality Act (CEQA) that is filed pursuant to the
Consumer Legal Remedies Act (Civ. Code Sec 1750 et seq.), the
court shall award court costs and attorney's fees to a
prevailing party in the action.
COMMENT
1.Stated need for the bill
The author writes:
Currently CEQA is abused by enabling frivolous lawsuits
against all kinds of companies and groups for a litany of
reasons. A comprehensive report by the law firm Holland and
Knight found that, "Sixty-four percent of the petitioners
filing CEQA lawsuits are either individuals or local
associations that often have no prior track record of
environmental advocacy." This is compounded by the fact that
existing law only allows for plaintiffs to recoup their legal
fees and expenses, meaning that even if defendants prevail on
the merits of their cases they have no way to seek restitution
other than a counter-suit. There is also an extreme
implication with regard to the housing market.
As the Legislative Analyst Office notes in a March 2015
report, "CEQA's complicated procedural requirements give
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development opponents significant opportunities to continue
challenging housing projects after local governments have
approved them."
SB 1306 will empower courts to award court costs and
attorney's fees to a prevailing party as opposed to just a
plaintiff in CEQA litigation.
2.Public policy behind CEQA
When it passed CEQA in 1970, the Legislature declared that the
"maintenance of a quality environment for the people of this
state now and in the future is a matter of statewide concern."
(Pub. Resources Code Sec. 21000(a).) CEQA's findings and
declarations expressly direct "all agencies of the state
government which regulate activities of private individuals,
corporations, and public agencies which are found to affect the
quality of the environment, [to] regulate such activities so
that major consideration is given to preventing environmental
damage." (Pub. Resources Code Sec. 21000(g).) CEQA's
environmental review process gives effect to the policy of
giving major consideration to preventing environmental damage by
forcing public agencies to critically examine the environmental
impacts of proposed projects before approving them. The
California Supreme Court has recognized that CEQA's "purpose is
to inform the public and its responsible officials of the
environmental consequences of their decisions before they are
made," and in so doing "protects not only the environment but
also informed self-government." (Citizens of Goleta Valley v.
Board of Supervisors (1990) 52 Cal.3d 553, 564 [citations
omitted].) CEQA exists "not to generate paper, but to compel
government at all levels to make decisions with environmental
consequences in mind." (Id. [citations omitted].)
CEQA, like many other statutes in environmental law, is
primarily enforced through litigation brought by private
parties. While the ultimate "duty of identifying and evaluating
potentially feasible project alternatives" and assessing the
environmental impact of a project "lies with the proponent and
the lead agency, not the public," (Citizens of Goleta Valley v.
Bd. of Supervisors, 52 Cal.3d at 568.) it is the public's power
to hold agencies accountable that gives CEQA's mandates their
true force. By authorizing prevailing parties to shift the
costs of litigation to non-prevailing parties, this bill could
chill public participation in CEQA enforcement. Parties with
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meritorious claims may be reluctant to challenge agency actions
out of a concern that they could be ordered to pay a sizeable
sum should they lose in court. Raising this concern, Sierra
Club California, in opposition, states:
We oppose SB 1306, which requires attorney's fees and court
costs to be paid to prevailing parties in a suit litigated
under the California Environmental Quality Act (CEQA). This
will prevent citizens from being able to effectively enforce
the law, leading to potentially faulty Environmental Impact
Reports and insufficient mitigation. Effective enforcement of
CEQA is contingent on the public's ability to enforce the law,
often through litigation. These suits are done to protect the
public and the environment from any problems that may arise
during the process. Enforcing environmental laws already
costs the public through their own attorneys and court fees.
Adding the risk of covering prevailing party costs would be
prohibitive and restrict access to the courts.
3."American Rule" on attorney fees
Generally in the United States, the "American rule" is that
parties are to bear their own costs in civil litigation. In
Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S. 240,
the United States Supreme Court held that it was the province of
the legislative branch to craft exceptions to the "American
rule," and that courts were not free to shift such costs absent
express legislative authorization. (Id. at 269-270.) In 1977,
the Legislature enacted Code of Civil Procedure Section 1021.5,
which appeared to be "in significant measure ? an explicit
reaction to the United States Supreme Court's Alyeska decision."
(Woodland Hills Residents Assn., Inc. v. City Council (1979) 23
Cal.3d 917, 934.)
Section 1021.5 provides courts with authority to award
attorney's fees in actions to enforce important rights in the
public interest that confer a significant benefit on a large
class of persons. Specifically, Section 1021.5 was intended to
encourage litigation deemed to be in the public interest by
persons acting as a private attorney general. This doctrine
rests on the recognition that privately initiated lawsuits are
often essential to the effectuation of public policies embodied
in constitutional or statutory provisions, and that without some
mechanism authorizing the award of attorney fees, private
actions to enforce such public policies would be financially
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impracticable. As explained recently by the California Supreme
Court:
[s]ection 1021.5 [addresses] the problem of affordability of
such lawsuits. Because public interest litigation often
yields nonpecuniary and intangible or widely diffused
benefits, and because such litigation is often complex and
therefore expensive, litigants will be unable either to afford
to pay an attorney hourly fee or to entice an attorney to
accept the case with the prospect of contingency fees, thereby
often making public interest litigation as a practical matter
. . . infeasible." (Conservatorship of Whitley (2010) 50
Cal.4th 1206, 1219 [internal citations and quotation marks
omitted].)
The standard set by Section 1021.5 is rigorous and is
conditioned upon three requirements being met: (1) a significant
benefit is provided to the general public; (2) the necessity and
financial burden of private enforcement, or of enforcement by
one public entity against another public entity, are such as to
make the award appropriate; and (3) such fees should not in the
interest of justice be paid out of the recovery, if any.
Additionally, the statute specifically provides for an important
exception to this rule when the matter involves a public agency,
stating that "with respect to actions involving public entities,
this section applies to allowances against, but not in favor of,
public entities." (Code Civ. Proc. Sec. 1021.5.)
The types of suits that would be subject to fee shifting under
this bill would largely involve a private person or entity who
brings an unsuccessful suit against a public entity, which is
not one of the fee-shifting scenarios currently authorized by
Section 1021.5. Allowing fee shifting by a public entity
against private individuals could undermine an individual's
ability to pursue judicial redress to enforce CEQA. Fears of
having to pay a substantial sum in attorney fees may
disincentivize individuals from bringing meritorious claims
against public entities under CEQA, thereby undermining an
important check on the powers exercised by these entities.
Writing in opposition, the Center for Biological Diversity
states:
[This] bill would threaten plaintiffs in certain California
Environmental Quality Act cases with liability for defendants'
attorneys' fees even when their actions are brought in good
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faith. The bill's adoption thus could set a precedent that
improperly chills enforcement of California's premier
environmental protection statute. . . . Existing law protects
defendants by allowing them to recover fees in bad-faith
actions. This properly discourages frivolous lawsuits, while
allowing good-faith actions enforcing important public rights
to proceed. Courts also have well-established authority to
ensure that plaintiffs can recover attorneys' fees only if
their successful litigation truly confers a public benefit. .
. . This attempt to single out and chill CEQA litigation is
ill-advised and unnecessary.
4.Payment of costs
Costs of litigation, in contrast to attorney fees, are generally
recoverable by the prevailing party in civil litigation as a
matter of right. Code of Civil Procedure Section 1032 states
that, "except as otherwise expressly provided by statute, a
prevailing party is entitled as a matter of right to recover
costs in any action or proceeding." Other provisions in the
Code of Civil Procedure, such as Section 1033.5, enumerate
specific items that may be recovered as costs as well as those
which cannot be claimed. CEQA contains no provision expressly
barring a prevailing party from recovering their costs in an
action brought under the statute. Consequently, existing law
already authorizes a prevailing party to recover his or her
costs under CEQA, rendering the cost shifting provision of this
bill unnecessary.
5.Codification in the Consumer Legal Remedies Act
This bill provides that in litigation pertaining to CEQA that is
filed pursuant to the Consumer Legal Remedies Act (Civ. Code Sec
1750 et seq.), the court shall award court costs and attorney
fees to a prevailing party in the action. The Consumer Legal
Remedies Act (CLRA) is a consumer protection statute intended
"to protect consumers against unfair and deceptive business
practices and to provide efficient and economical procedures to
secure such protection." (Civ. Code Sec. 1760.) Among other
things, it prohibits merchants from representing that goods have
"characteristics, ingredients, uses, benefits, or quantities
which they do not have," or representing that goods "are of a
particular standard, quality, or grade" when they are of
another. (Civ. Code Sec. 1770.) Consumers who are harmed by
unlawful practices specified in the CLRA have a right of action
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to recover damages and other remedies.
Passed by the Legislature in 1970, the CLRA is intended to be
"liberally construed" by the courts and "applied to promote its
underlying purposes." (Civ. Code Sec. 1760.) However, even a
broad construction of the CLRA is unlikely to encompass CEQA
claims. A litigant who wishes to challenge an agency's
compliance with CEQA may do so by bringing suit under that act,
which generally allows legal challenges alleging that:
a public agency is carrying out or has approved a project that
may have a significant effect on the environment without
having determined whether the project may have a significant
effect on the environment;
a public agency has improperly determined whether a project
may have a significant effect on the environment;
an environmental impact report prepared by, or caused to be
prepared by, a public agency does not comply with CEQA;
a public agency has improperly determined that a project is
not subject to CEQA; or
another act or omission of a public agency does not comply
with CEQA. (Pub. Resources Code Sec. 21167.)
It is unclear how a CEQA lawsuit alleging agency noncompliance
as described above could be pled under the CLRA's unfair
competition and unfair or deceptive acts or practices provisions
concerning the sale or lease of goods or services to a consumer.
Should the Committee approve this bill, it may wish to consider
re-codifying its provisions within CEQA to give them proper
legal effect.
1.Bill should be sent back to Senate Rules Committee for
consideration of request from Senate Environmental Quality
Committee
The Senate Environmental Quality Committee has indicated that
this bill may have an impact to policy areas within their
jurisdiction. As a result, should the Committee approve the
bill, the motion should be to send the bill back to the Senate
Rules Committee for consideration of the re-referral request
from the Environmental Quality Committee.
Support : California Chamber of Commerce
Opposition : California League of Conservation Voters; Center
for Biological Diversity; Consumer Attorneys of California;
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Disability Rights California; Sierra Club California; State
Building and Construction Trades Council of California
HISTORY
Source : Author
Related Pending Legislation :
SB 122 (Jackson and Hill, 2015) would authorize lead agencies,
upon request of a project applicant, to concurrently prepare the
administrative record while going through the CEQA environmental
review process, rather than after the process has concluded, as
specified. This bill would also improve the accessibility of
CEQA related documents by expanding the use of California's
online CEQA State Clearinghouse. This bill is pending in the
Assembly Appropriations Committee.
SB 1248 (Moorlach, 2016) would require plaintiffs or petitioners
in CEQA actions to disclose certain information about named
plaintiffs, including their names and cities and counties of
legal residence, as well as the identity of individuals or
entities that contribute in excess of $100 dollars toward a
plaintiff's costs in an action. This bill would also require
plaintiffs to identify any pecuniary or business interest
related to the project or issues involved in the CEQA action of
any named plaintiff or person that contributes in excess of $100
to the costs of the action, as specified. This bill is pending
in the Senate Environmental Quality Committee.
Prior Legislation :
SB 1451 (Hill and Roth, 2014) would have expanded CEQA's
exhaustion requirements by, among other things, precluding an
individual from challenging a public agency's compliance with
the act if the alleged grounds of noncompliance were known or
could have been known with the exercise of reasonable diligence
during a public comment period, but the alleged grounds of
noncompliance were presented to the public agency at a time
other than during the public comment period. This bill failed
passage in the Senate Judiciary Committee.
SB 1456 (Simitian, Ch. 496, Stats. 2010) added the requirement
that an organization formed after the approval of a project may
bring an action or proceeding to attack, review, set aside,
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void, or annul the acts or decisions of a public agency on the
grounds of noncompliance with CEQA if a member of that
organization presented to the public agency orally or in writing
the alleged grounds for noncompliance during the public comment
period or prior to the close of the public hearing on the
project before the issuance of the notice of determination.
SB 919 (Dills, Ch. 1131, Stats. 1993) enacted CEQA's exhaustion
requirement by prohibiting the bringing of an action or
proceeding under the act unless the alleged grounds for
noncompliance with the act were presented to the public agency,
and unless the person bringing the action or proceeding objected
during the public comment period, or prior to the close of the
public hearing on the project.
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