California Supreme Court to Review Appellate Decision that Imposed CEQA Roadblocks to City's "Go Green" Ordinance

By Christopher J. Diaz

The efforts of the City of Manhattan Beach (City) to protect marine life by stopping the accumulation of plastic bags in the Pacific Ocean serves as a cautionary tale for all public agencies. Ignoring the City's efforts to "go green," the Second District Court of Appeal in Save the Plastic Bag Coalition v. City of Manhattan Beach, 181 Cal.App.4th 521 (2010), affirmed the trial court's ruling requiring the City to expend the funds and effort to prepare a full environmental impact report (EIR) before it adopts an ordinance banning retail establishments, restaurants, and vendors from distributing plastic bags at locations in the City.

On April 22, 2010, the California Supreme Court granted review (No. S180720). Nevertheless, public agencies that are considering adopting an ordinance to protect the environment should proceed carefully if relying on a categorical exemption or adopting a negative declaration pursuant to the California Environmental Quality Act (CEQA). The opinion in Save the Plastic Bag Coalition and the pointed dissent provide insight on differing judicial views of what CEQA review may be required for "green" ordinances.

Background

Before adopting the ordinance, the City adopted a negative declaration, which acknowledged that its prohibition on the distribution of plastic bags could lead to an increase in the use of paper bags. The City concluded that the increased use of paper bags would not be a significant effect of the ordinance as the use would be relatively small because of its small population, at just over 30,000. As further evidence that paper bag use would not substantially increase, the City noted that only 11.2 percent of the City is zoned for commercial use, with only 217 licensed retail establishments in the City using plastic bags on a daily basis. Shortly after the City adopted the ordinance, however, "Save the Plastic Bag Coalition," an unincorporated association consisting primarily of plastic bag manufacturers, filed suit alleging the City should have conducted a full EIR to study the environmental effects of the increased distribution of paper bags before adopting the ordinance.

The Court's Analysis of "Go Green" Laws under CEQA

In a 2 to 1 decision, the Court of Appeal agreed with the plastic bag manufacturers. The majority's analysis is noteworthy for the following reasons:

First, the Court of Appeal ignored the CEQA categorical exemption established by Guideline 15308 for projects undertaken to protect the environment. This Guideline exempts a project from CEQA review where it is undertaken "to assure the maintenance, restoration, enhancement, or protection of the environment." Many agencies may have used this exemption for similar ordinances designed to "go green" or protect the environment.

However, based on the Court's current holding, which is not binding law in view of the Supreme Court's review, public agencies should be prepared to scrutinize the use of this exemption for any "go green" ordinances. This is so, because even though the City concluded no potential significant effects would result from its adoption of the ordinance, which arguably should have allowed it to make use of the exemption, the Court sided with the coalition and identified deforestation and other environmental effects, that would have made use of the exemption in this instance inapplicable. As a reminder, public agencies should not use categorical exemptions where there is a reasonable possibility that an activity will have a significant effect on the environment due to unusual circumstances. See, CEQA Guideline 15300.2.

Second, the Court of Appeal appeared to stretch the definition of "environment" well beyond the boundaries of the City. CEQA requires an EIR whenever there is a fair argument that a project may have a significant effect on the "environment." "Environment" is defined in CEQA to mean "the physical conditions [that] exist within the area [that] will be affected by a proposed project." See, Cal. Public Resources Code Section 21060.5. In reaching its decision, the Court cited the adverse environmental effects of paper bags including deforestation, increased energy use, increased greenhouse gas emissions, increased solid waste production, and increased acid rain.

In a typical CEQA analysis, the "area that will be affected by a project" would mean the affected city or other local region. In this case, however, the Court based its decision on the negative environmental effects of paper bags that could arguably occur anywhere in the world where paper bags are manufactured. Thus, although an agency may conclude that its ordinance would not have environmental effects in its city or other local region, it should be cautious in this approach because the Court in this instance was willing to examine the environmental effects well outside the local region.

Finally, this case would make it much easier for a party with a commercial interest to use CEQA as a sword to protect its economic interests. Ordinarily, under existing law, a petitioner must have a "beneficial interest" in the litigation, or the court will likely find it lacks standing to bring a CEQA lawsuit. For CEQA purposes, courts find a "beneficial interest" when the petitioner establishes it may be affected by the project's environmental impacts, as opposed to some other pecuniary interest.

A very narrow exception to this rule exists where a petitioner without a beneficial environmental interest in the litigation, such as a corporation or other commercial interest, sues to enforce a public duty of the lead agency or to enforce the public's interest. To do so, it must show: (1) a continuing interest or commitment to the subject matter; (2) by a corporation or other commercial interest consisting of or representing individuals beneficially interested in the action; (3) who would find it difficult or impossible to act on their own; and, (4) where standing would not conflict with other public policies. See, Regency Outdoor Advertising Co. Inc. v. City of West Hollywood, 153 Cal.App.4th 825, 833 (2007). The circumstances where this public duty/public interest exception is applied to allow a petitioner standing are relatively few.

In Save the Plastic Bag Coalition, however, the Court looked past the coalition members' lack of beneficial interest, and held that their quest to enforce the City's public duty to comply with CEQA entitled them to sue even though some of the manufacturers would "benefit commercially if the City … chose not to impose a plastic bag distribution ban." If the Supreme Court upholds the appellate decision, it could clear the way for one business to challenge a competitor's project on the theory of enforcing a public duty even when the competitor has no environmental interest whatsoever in the matter.

The Dissent

Justice Richard Mosk's scathing dissent takes issue with his fellow justices' decision to require the small city of Manhattan Beach to expend public monies to prepare an environmental document for an ordinance designed to protect the environment. This is made even more ironic by the fact that the legislatively enacted CEQA is being used in this manner even after the legislature's repeated declarations that plastic bags cause environmental harm and its enactment of legislation promoting the use of reusable bags and the recycling of clean carryout plastic bags. See, Cal. Public Resources Code Section 42250, et seq.

While the majority failed to discuss CEQA exemptions, Justice Mosk believed two potential exemptions could apply. First, the "common sense" exemption of Guideline 15061(b)(3) could apply as the City cited facts in the initial study that supported its belief that no significant environmental effects would originate from the project. Second, Guideline 15308 could apply as this ordinance was designed to protect the environment by limiting the distribution of plastic bags.

Justice Mosk also did not believe that the ordinance could cause larger scale environmental effects such as deforestation and an increase in global warming, requiring an EIR. Justice Mosk also doubted the petitioner's claim that a "cumulative impact" would result as Manhattan Beach was only the third city in the state to adopt an ordinance banning plastic bags.

Moving Forward

Pending the final decision of the California Supreme Court, public agencies should be sure to scrutinize the use of any CEQA exemptions as an ordinance designed to protect the environment does not necessarily mean it is without environmental effects, and the use of an exemption such as Guideline 15308 may not always apply. When conducting CEQA environmental analysis, an agency should not necessarily limit its environmental analysis to just the local region, but may need to consider wider potential impacts – how wide remains to be seen. Finally, the Supreme Court will hopefully provide guidance on whether a party can file a CEQA lawsuit even if its only interest in the outcome of the litigation is for a business advantage.

FOR ADVICE FROM RW&G ON CEQA ISSUES, PLEASE CONTACT CHRISTOPHER J. DIAZ, DAVID SNOW, OR ANY OF THE ATTORNEYS IN THE FIRM'S PUBLIC LAW OR LITIGATION DEPARTMENTS

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