Real Estate and Land Use

August 05, 2015

Cal State University Cannot Avoid Off-Site Traffic Mitigation Payments Because the Legislature Failed to Approve Funds

Authors: Kristina Lawson and Robia Crisp

City of San Diego v. Board of Trustees of the California State University

Why It Matters: The California Supreme Court has clarified language from its prior decision in City of Marina v. Board of Trustees of California State University (2006) 39 Cal.4th 341 by concluding that a state agency that has an obligation to make fair-share payments to mitigate off-site traffic impacts of a proposed project does not satisfy its duty to mitigate under CEQA simply by stating that it has sought funding from the Legislature to pay for such mitigation, and if funding is not provided, the impact would remain significant and unavoidable. The Court further concluded that if the receipt of requested funds is uncertain, such uncertainty on its own is not the basis for a determination that a mitigation measure is infeasible.

Facts: In November 2007, the Board of Trustees of the California State University certified an EIR and campus master plan revision for San Diego State University (SDSU) to expand the campus to accommodate more than 10,000 additional students over the next several years. The expansion included new faculty, staff and student housing, a research and instructional facility, a new student union building, and a hotel. In the EIR, the Board acknowledged that the proposed project would contribute significantly to cumulative traffic congestion off-campus in the City of San Diego and predicted that in the longterm, the project would significantly impact 15 intersections, eight street segments and four freeway mainline segments. For each affected location, the Board estimated the project’s fair-share contributions to mitigate increased congestion to be an average of 12 percent but offered no assurance that it would pay SDSU’s fair share of the mitigation costs.

Relying on language in the California Supreme Court’s 2006 City of Marina decision, the EIR stated that although fair-share mitigation was recommended to reduce the identified impacts to a level below significant, CSU’s fair-share funding commitment was necessarily conditioned upon requesting and obtaining funds from the California Legislature and that if the Legislature did not provide funding, or if funding was significantly delayed, all identified significant impacts would remain significant and unavoidable. In City of Marina, the Court held that while the Trustees had an obligation to request appropriation from the Legislature for voluntary mitigation payments, the power to mitigate the “project’s effects through voluntary payments is ultimately subject to legislative control; if the Legislature does not appropriate the money, the power does not exist.” (39 Cal.4th at 372.) In approving the expansion project, the Board found that mitigation of traffic impacts was infeasible, that the impact would remain significant and unavoidable, and adopted a statement of overriding considerations.

On December 14, 2007, the City, the San Diego Association of Governments and San Diego Metropolitan Transit System filed petitions for writ of mandate challenging the Board’s decision to certify the 2007 EIR. The trial court denied the petitions for writ of mandate, but on appeal, the Court of Appeal directed the superior court to issue a writ of mandate ordering the Board to vacate its decision certifying the 2007 EIR. The Supreme Court granted the Board’s petition for review.

The Decision: The main issue before the Court was the following question of law: Does the language in City of Marina support the Board’s assumption in the 2007 EIR that CSU may not contribute its fair share to mitigate the off-campus environmental effects of campus expansion unless the Legislature makes an appropriation for that specific purpose? The answer is no.

Providing the context for the City of Marina decision, Justice Werdegar, writing for the Court (and author of the City of Marina decision), pointed out that the language relied upon by CSU was nonbinding dictum and that the Board’s duty to mitigate extended beyond the boundaries of the campus. The Court concluded that if the Board could not adequately mitigate or avoid off-campus environmental effects by performing acts on the campus, then paying a third party to perform the necessary acts off campus may well represent a feasible alternative.

The Court gave four reasons why the City of Marina dictum did not justify the Board’s position that CSU’s ability to mitigate by contributing fair-share payments for circulation improvements was feasible only if the Legislature appropriated funds for that specific purpose.

First, the Court described the City of Marina language as simply an overstatement and explained that in mitigating the effects of its projects, a public agency has access to all of its discretionary powers and not just the power to spend appropriations. Moreover, the Court pointed out that agencies such as CSU enjoy some discretion over the use of appropriations.
Second, the Court determined that neither CEQA nor any other decision, including City of Marina, suggests that mitigation costs for a project funded by the Legislature cannot appropriately be included in the project’s budget and paid with the funds appropriated for the project.
Third, CEQA itself does not condition the duty of a state agency to mitigate a project’s environmental effects on the Legislature’s grant of an earmarked appropriation. Rather, “[m]itigation is the rule: Each public agency shall mitigate or avoid the significant effects on the environment of projects that it carries out or approves whenever it is feasible to do so.”
Finally, the Board’s interpretation of the City of Marina dictum depended upon a distinction between environmental impacts occurring on the project site and those occurring off-site, which distinction is not supported by CEQA.

The Court declined to adopt the Board’s proposed rule that off-site mitigation payments may be funded only with earmarked appropriations. Specifically, such a rule, if applied to all state agencies, would in effect force the Legislature to sit as a standing environmental review board to decide on a case-by-case basis whether state agencies’ projects should proceed despite unmitigated off-site environmental effects. In addition, if the Legislature did not make an earmarked appropriation for mitigating the off-site effects of a particular state project but the responsible state agency nevertheless decided to proceed without mitigation, the cost of addressing that project’s contribution to cumulative impacts on local infrastructure would impose a financial burden on local and regional governmental agencies, which could not recover fees to mitigate the environmental impacts of state projects from other developers due to a lack of rough proportionality. Finally, off-site mitigation would likely be found infeasible for many, if not all, state projects that receive nonstate funding, and more such projects would proceed without mitigation pursuant to statements of overriding considerations. Taken together, the consequences of adopting the Board’s proposed rule would substantially impair CEQA’s fundamental statutory directive that each public agency shall mitigate or avoid the significant effects on the environment of projects that it carries out or approves whenever it is feasible to do so.

Lastly, the Court addressed and rejected three new arguments presented by the Board asserting that (1) an Education Code amendment relating to CSU agreements with local public agencies regarding the mitigation of off-campus impacts related to campus growth was intended to limit the Board’s duty to mitigate off-site impacts, (2) the Legislature’s failure to grant the Board’s request for an earmarked appropriation to mitigate off-site environmental effects has the effect of prohibiting CSU from spending any other public funds for that purpose, and (3) only appropriated funds may be used for campus expansion. In sum, the Court soundly rejected the Board’s assumption that the feasibility of mitigating its project’s off-site environmental effects depends on a legislative appropriation for that specific purpose.

The Court held that the Board’s erroneous assumption invalidated its finding of infeasibility because it constituted a failure to proceed in a manner required by law, and also invalidated the Board’s statement of overriding considerations because CEQA does not authorize an agency to proceed with a project that will have significant, unmitigated effects on the environment based simply on a weighing of those effects against the project’s benefits, unless the measures necessary to mitigate those effects are truly infeasible. Accordingly, the Supreme Court affirmed the Court of Appeal’s decision directing the issuance of a writ of mandate ordering the Board to vacate its decision certifying the EIR.

Practice Pointers

State agencies cannot refuse to pay their fair-share contributions to address off-site mitigation of the impacts of public projects by citing the lack of legislative appropriations earmarked for mitigation payments.
State agencies should conduct an evaluation of a range of financing alternatives in order to determine the feasibility of the mitigation. It likely isn’t enough under CEQA to state that the necessary funding is unavailable from one source – whether other sources of funding exist should be considered.