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CEQA Challenges To Revenue Measures Rejected

Two separate California Environmental Quality Act lawsuits over unrelated measures that raised revenue for transportation purposes have been thrown out by the state Court of Appeal.

In one case, the court ruled that CEQA did not apply to the Santa Barbara County Association of Government's placement of a half-cent sales tax for transportation projects on the ballot. Environmental review was not required because the ballot measure did not constitute a binding plan to construct the projects, the court ruled.

In the other case, the court held that a bus fare increase in Los Angeles County was exempt from CEQA review because the additional revenue would merely pay for operations and capital projects needed to maintain service in existing service areas.  

The Santa Barbara decision is the second published opinion related to the Measure A half-cent sales tax. Voters approved the 30-year sales tax extension in November 2008. Last year, the Second District Court of Appeal ruled that representatives of the Santa Barbara County Association of Governments (SBCAG) did not violate election law by preparing the Measure A transportation expenditure plan and presenting the plan during public meetings (Santa Barbara County Coalition Against Automobile Subsidies v. Santa Barbara County Assn. of Governments, 167 Cal.App.4th 1229; see CP&DR Legal Digest, December 2008).

While that case was on appeal, some of the same Measure A opponents – this time organized as Sustainable Transportation Advocates of Santa Barbara – filed a new suit against SBCAG. This suit argued that SBCAG, which functions as the transportation authority, could not approve Measure A for the ballot and adopt the transportation expenditure plan (also called the "investment plan") without environmental review. The association of governments had done just that in June.

Santa Barbara County Superior Court Judge Thomas Anderle rejected the Measure A opponents' arguments, concluding SBCAG's actions did not qualify as a "project" under CEQA Guidelines § 15378, subdivision (b)(4). The law does not apply to government funding mechanisms or fiscal activities, and Measure A did not "involve any commitment to any specific project," Anderle ruled. The Measure A opponents appealed, and a unanimous three-judge panel of the Ventura-based Second District Court of Appeal, Division Six, upheld the lower court.

At the appellate court level, SBCAG argued the lawsuit was moot because the association of governments had certified an environmental impact report for the regional transportation plan in September 2008, and that EIR considered all of the projects in the Measure A expenditure plan. The Second District rejected that argument because the EIR was not in place when SBCAG approved the ballot measure and because that EIR is the subject of separate litigation by the same group. Instead, the court considered whether or not SBCAG's approval of Measure A and the expenditure plan constituted a project.

Helping guide the court was last year's state Supreme Court ruling in Save Tara v. City of West Hollywood, (2008) 45 Cal.4th 116, in which the court determined that approval of a development agreement contingent upon later completion of environmental review qualified as a project under CEQA (see CP&DR Legal Digest, December 2008). In Save Tara, the court ruled that CEQA applied to the development agreement because the city was committing itself to a course of action, namely, development of an affordable housing project.

Measure A opponents sought support from Save Tara as well as from Friends of Sierra Madre v. City of Sierra Madre, (2001) 25 Cal.4th 165, and from Fullerton Joint Union High School Dist. v. State Board of Education, (1982) Cal.3rd 779. In Sierra Madre, the California Supreme Court ruled the city should have completed environmental review of a city-authored ballot measure to remove 29 structures from the city's register of historic landmarks (see CP&DR Legal Digest, May 2001). In Fullerton, the state Supreme Court ruled that a ballot measure carving a new Yorba Linda school district out of the Fullerton district should have undergone environmental review.

However, the Second District ruled that approval of Measure A and the investment plan were not the same as projects in the earlier cases because the investment plan provided "a brief, general description" of the projects, served as an information document for voters, and did not foreclose alternatives or mitigation measures that would be part of subsequent CEQA review. The fact that the ordinance approving Measure A permits SBCAG to amend the investment plan without voter approval indicated that SBCAG "had not ‘committed itself to any project as a whole or to any particular features so as to preclude any alternatives or mitigation measures that CEQA would otherwise require to be considered,'" Justice Steven Perren wrote, citing Save Tara.

This portion of the decision drew the interest of a number of transportation authorities concerned that the Save Tara decision might have expanded the definition of a project. Those agencies asked the court to publish its opinion so it may be cited as precedent.

"It's the first decision in the post Save Tara-world. It's the first decision to apply Save Tara to a funding mechanism," observed Whitman Manley, the attorney who represented SBCAG.

The Second District further ruled that the Sierra Madre and Fullerton rulings were not applicable. In Sierra Madre, the city committed itself to delisting of 29 structures if the ballot measure passed. In Fullerton, the school district was precluded from maintaining the status quo if the ballot measure passed.

"Unlike the city's action in Save Tara, [SBCAG's] actions did not demonstrate that, as a practical matter, it had committed itself to the implementation of the transportation projects in the investment plan," Perren wrote. "Measure A does not qualify as a project within the meaning of CEQA because it is a mechanism for funding proposed projects that may be modified or not implemented, depending upon a number of factors, including CEQA review."

Manley said the court's reading of Sierra Madre is important because it eliminates the argument that any measure placed on the ballot by a local agency is subject to CEQA.

The Santa Barbara attorney who has brought all of the Measure A challenges, Eugene Wilson, said he will appeal to the state Supreme Court. He said the Second District should have recognized that the transportation commission's actions and the voters' approval of Measure A amounted to commitment to a course of action that should have received environmental review, just as the city in Save Tara took actions that showed a definite commitment.

"For the court to say there was not a commitment because there was an amendment provision [in the investment plan] doesn't make any sense," Wilson said. "The court did not understand Save Tara."

The Los Angeles case concerned a Metropolitan Transportation Agency (MTA) decision in May 2007 to raise the base bus fare by 25 cents to $1.50, and to boost the price of monthly passes. The MTA declared the first significant fare increases since the late 1980s to be exempt from CEQA. The agency said it needed the money because it had run an operating deficit of $641 million during the previous five years, and it projected a $1.8 billion deficit over the next 10 years without an increase. The deficits forced MTA to tap reserves, shift money from capital improvements to operations and lay off more than 500 administrative employees.

The Bus Riders Union, the Labor/Community Strategy Center and the Natural Resources Defense Council sued, arguing the fare increase was not exempt from CEQA because the MTA would use the money for system expansion. The Los Angeles County Superior Court ruled for MTA, and a unanimous three-judge panel of the Second District Court of Appeal, Division Two, upheld the ruling.

The MTA employed a section of CEQA – Public Resources Code § 21080, subdivision (b)(8) – that exempts from review the setting of rates and fares which the agency intends to use solely for meeting operating expenses, purchasing supplies and funding "capital projects necessary to maintain service within existing service areas." The fare opponents cited public statements by MTA representatives about the fare increase permitting the agency to resume system-expanding projects.

But the court found that these statements "merely confirm that for many years MTA diverted revenue to cover its operational deficit, and that the additional revenue from the proposed fare increase would allow MTA to divert less money because the deficit will decrease."

"Even assuming Bus Riders Union could undermine MTA's declaration of its future intent," Presiding Justice Roger Boren wrote for the court, "the factual record supports MTA's stated intentions."

First Case:
Sustainable Transportation Advocates of Santa Barbara v. Santa Barbara County Association of Governments, No. B212524, 2009 DJDAR 15995. Filed October 14, 2009. Ordered published November 10, 2009.
The Lawyers:
For Sustainable Transportation: Eugene Wilson, (805) 683-4648.
For SBCAG: Whitman Manley, Remy, Thomas, Moose & Manley, (916) 443-2745.

Second Case:
Bus Riders Union v. Los Angeles County Metropolitan Transportation Agency, No. 212145, 2009 DJDAR 15991. Filed October 19, 2009. Ordered published November 10, 2009.
The Lawyers:
For Bus Riders Union: David Pettit, Natural Resources Defense Council, (310) 434-2300.
For MTA: Elwood Lui, Jones Day, (213) 489-3939.
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