SAN FRANCISCO—The recent California Building Industry Association vs. Bay Area Air Quality Management District ruling, which has been commonly referred to as the "Reverse CEQA" case, confirms a fundamental limitation on the reach and scope of CEQA analysis and mitigation requirements, based on the plain language and basic thrust of the statute, but developers shouldn't get too comfortable, Arthur Coon, shareholder and co-chair of Miller Starr Regalia's land-use practice group, tells GlobeSt.com. Since the case's decision had been long awaited, we spoke to several experts about its implications. Here, Coon gives us his opinion on the key takeaways of the Court's opinion and what it means for developers going forward.

GlobeSt.com: What is the key takeaway from the Court's opinion in this case?

Coon: There is a general rule that CEQA only requires a project developer to analyze and mitigate for adverse environmental changes that the proposed project itself will cause—whether these are new adverse effects or contributions to existing adverse environmental conditions that cause them to be worse than they already are. CEQA does not operate "in reverse." It requires analysis of a project's impacts on the environment, not the existing environment's impact on a project, i.e., its future residents and users.

GlobeSt.com: Why is this an important ruling?

Coon: For many reasons. It confirms a fundamental limitation on the reach and scope of CEQA analysis and mitigation requirements, based on the plain language and basic thrust of the statute. Were the rule otherwise, it would become much more difficult to locate residential projects (for example) in urban-infill locations that are subject to already degraded environmental conditions such as air pollution, soil and groundwater contamination, noise, and traffic. If such existing conditions were treated as project impacts, developers would be required by CEQA to analyze and mitigate for them—including considering project modifications like setbacks and density reductions, and even alternative locations and other mitigation measures to address impacts with no causal connection to their projects. This would not only contravene federal constitutional limits on permissible development conditions and exactions, but it also would have other deleterious effects. It would discourage the very infill and brownfields urban developments that California's other landmark environmental laws (AB 32, SB 375, SB 742) call for, and would actually perversely incentivize the development of more-distant "greenfields" with more-pristine existing conditions. This would, among other things, increase vehicle miles travelled and greenhouse gas emissions. "Reverse CEQA" would also, if applied as a general rule, render preparing legally compliant CEQA documents exponentially more difficult for lead agencies—and concomitantly paint big new litigation "targets" on their backs.

GlobeSt.com: Can you give an example?

Coon: There arguably are always environmental impacts to new project users and residents from being brought to a location where there were previously no residents or users, and many of these impacts may implicate human health or safety. Imagine if, in addition to analyzing and mitigating for its myriad other impacts on the environment, a new resort hotel located on the California coast was required to analyze and mitigate for the risk of shark and jellyfish attacks on its future guests, or if a desert resort or residential development needed to analyze and mitigate the increased risk of melanoma from its users' sun exposure, or if a new small business opening in a high-crime urban neighborhood had to analyze and mitigate for the risk of armed robberies impacting its workers and customers. While those examples may seem farfetched, there is no principled reason why they would not be required by "reverse CEQA." The point is that the required analyses of the environment's impacts on a future project could be far-reaching—possibly limited only by the fertile imaginations of zealous and creative CEQA plaintiffs' attorneys. And that is a very scary thought to cities, counties and other lead agencies, as well as the developers who pay for and depend on the validity of their CEQA reviews.

GlobeSt.com: Since it's a "general" rule, are there exceptions?

Coon: In its opinion's concluding several pages, the Supreme Court noted specific statutory exceptions, stating: "Although CEQA does not generally require an evaluation of the effects of existing hazards on future users of the proposed project, it calls for such an analysis in several specific contexts involving certain airport … and school construction projects …, and some housing development projects[.]" Nonetheless, it rejected the Air District's argument that these specific, delimited exceptions supported any contrary general rule, stating: "[W]e cannot … extrapolate from these statutes an overarching, general requirement that an agency analyze existing conditions whenever they pose a risk to the future residents or users of a project."

GlobeSt.com: What are the implications for developers?

Coon: The full implications of the decision aren't entirely clear. CEQA plaintiffs attorneys can be expected to put a different "spin" on the Court's decision and to litigate issues that the CEQA public agency and defense bars now consider resolved. For example, does the "exacerbation" of existing hazards needed to trigger a "reverse" analysis require at least a "cumulatively considerable" contribution to the impact—or does it mean something else? With respect to the statutory housing project exemptions cited by the Court, does "reverse" analysis apply only to determine their applicability—or even after it is determined they don't apply and CEQA review is required? While project developers can certainly take comfort from the fact that the Supreme Court did not accept the Air District's attorneys' invitation to expand CEQA beyond a fair reading of its statutory language, and that it rejected OPR's regulatory efforts to do so, they shouldn't get too comfortable. Clearly, they should remain vigilant regarding future case-law developments and potential legislative efforts to expand the statute's reach, and they and their counsel and consultants should also stay attuned to the areas where "reverse" analysis is required through the specific and limited statutory exceptions to the general rule.