Implementing SB 375: Promises and Pitfalls

Heather Haney*

[ Click Here to Comment ]
[ download PDF ]

Introduction

On September 30, 2008, California passed the Sustainable
Communities and Climate Protection Act, or SB 375. The legislation was the
first in the country to link land use, transportation, and housing planning
with global warming. The nation’s attention was once again focused on
California’s efforts to address global climate change through innovative
regulation.[1] Three
years before, the legislature had passed The Global Warming Solutions Act of
2006, or AB 32, which requires the state to reduce greenhouse gas (GHG)
emissions to 1990 levels no later than 2020.[2] Since
passenger vehicles account for approximately thirty percent of the state’s
total emissions and their numbers have increased drastically from 1990 levels,[3]
it was generally accepted that without improved land use and transportation
policies, California would not be able to achieve the goals of AB 32.[4]
The general concept is that movement away from low-density suburban “sprawl”
and toward higher-density, transit-oriented development that is less dependent
on the private automobile would lead to lower GHG emissions.

SB 375 has three goals: (1) to use the regional
transportation planning process to help achieve the goals of AB 32; (2) to
provide possible streamlining of California Environmental Quality Act (CEQA)
procedures for residential projects, helping achieve the GHG emissions
reduction goals; and (3) to coordinate the regional housing needs allocation
process with the regional planning process. It builds upon existing regulatory
structures and seeks to incentivize more compact development through project
funding and process streamlining.

This Article will discuss the legislative history behind SB
375, the current language of the statute, what compromises were made in
developing its final language, what potential obstacles may arise in
implementing the law, and suggestions on additional legislative and
administrative steps that should be taken to practically achieve its goals.

Traffic on interstate 405 in Los Angeles, California. Image used under Creative Commons from Atwater Village Newbie.

I. Legislative History Pre-SB 375—The Implementation of AB 32

In September 2006, Governor Schwarzenegger signed AB 32,
granting the California Air Resources Board (CARB) broad authority over any
“source” of GHG emissions.[5] In
addition, CARB was authorized to require participation in programs to reduce
GHG emissions and to monitor compliance with statewide GHG limits.[6]

AB 32 set certain benchmarks for CARB. By January 1, 2008,
CARB was required to adopt regulations requiring monitoring and annual
reporting of GHG emissions from the most important sources.[7]
CARB met that deadline and is now focusing on meeting the next benchmark of
January 1, 2011 by establishing GHG emission limits and emission reduction
measures necessary to achieve 1990 levels.[8] These
GHG emission limits and reduction measures are to become operative by January
1, 2012.[9]

Planning experts and CARB quickly realized that even if cars
become more efficient and run on cleaner fuels, meeting AB 32’s GHG emissions
reduction targets will require Californians to drive less.[10]
Their idea was that through strategic regional planning there could be a
reduction in the number of trips and vehicle miles traveled (VMTs).[11]
Although this is easily said, adopting new development patterns requires
changing local land use polices, an arena of already complex procedures
involving deeply entrenched agencies typically opposed to change. SB 375 sets
in motion a regional planning process to do just that.

Governor Schwarzenegger signs SB 375.

II. Overview of SB 375

SB 375 went into effect on January 1, 2009 and targets GHG
emissions from passenger vehicles and light trucks.[12]
It is the product of much political compromise. Senator Steinberg called it “an
unlikely and powerful coalition for changing the way we think and act about
sustainable growth.”[13] The
statute endured twelve amendments, with developers, environmentalists, and
local and regional governments adding their concerns and making concessions
before its eventual adoption.[14] As a
result of these compromises, the statute sacrificed strict mandates and instead
opted for an incentives-only approach. The bill has something for everyone,
while leaving several issues open to interpretation and the will of concerned
parties. Although critics are skeptical of “carrot with no stick” laws, at a
minimum SB 375 is the first step toward creating an overarching strategy for
pursuing regional transportation-oriented development and reaching the goals of
AB 32. In addition, SB 375 not only provides a means for achieving the AB 32
goals for cars and light trucks; it also provides more certainty for local
governments and developers by framing how these reduction goals from daily
transportation could be achieved.[15]

A. Regional GHG Emissions Targets

SB 375 first requires CARB to establish GHG emissions
reduction targets for all eighteen Metropolitan Planning Organizations (MPOs)[16]
in the state for 2020 and 2035 by September 30, 2010. [17]
CARB appointed the Regional Targets Advisory Committee to recommend ways to
reduce emissions from each of California’s eighteen MPOs. The twenty-one-member
committee includes local government representatives of the MPOs, affected air
districts, coalitions of cities and counties, and members of the public.[18]
On October 9, 2009, the committee issued its final report to CARB recommending
the establishment of reduction targets that it says must be
“ambitious” enough to meet AB 32’s mandate, but
“achievable”—in other words, within each region’s financial and
political grasp.[19] The
focus is now on CARB, which must begin a consultation process with each of the
MPOs to estimate baseline emissions that are “ambitious yet
achievable” depending on regional transportation projects.

1. Sustainable Communities Strategies

Once the targets are set, the real planning begins as MPOs
must update their Regional Transportation Plans (RTPs) so that the resulting
development patterns and supporting transportation networks reduce GHG
emissions in accordance with their regional thresholds.[20]
The keystone of this is the development of a Sustainable Communities Strategy
(SCS). Each RTP must develop and adopt an SCS as a land use blueprint to reach
the targeted GHG reductions from passenger vehicles and light trucks if there
is any feasible way to do so. But how does CARB
determine when an SCS is “feasible?” Although the definition of
“feasible” is the same as that used in CEQA, CARB’s “determination of
‘feasibility’ is a quasi-legislative act that is reviewable under the
‘arbitrary and capricious’ standard instead of the ‘substantial evidence’
standard.”[21] CARB’s
finding of feasibility is thus granted substantial judicial deference.

2. Alternative Planning Strategies

If a MPO cannot feasibly meet its
GHG emission reduction target in an SCS, an Alternative Planning Strategy (APS)
must be prepared.[22] This alternative strategy must “identify the principal
impediments” to achieving regional targets and show how the emission reductions
will be met through alternative development patterns, infrastructure, or
additional transportation measures or policies.[23] Presumably, since the APS is not integrated into the RTP,
it would contain more severe limitations on development than the SCS in order
to ensure that the GHG reduction goals are met.

3. Federal Funding and Local Government Conformity

Although many have asked if the choice between developing an
SCS or APS matters, there are at least some potential benefits to the SCS. The
first is the possible effect of federal transportation funding to the region.
An acceptable SCS is incorporated into the RTP, while an APS is not. SB 375 makes it clear that local government transportation
projects that are identified in the RTP and are consistent with the SCS are
given priority for federal transportation funding. Thus, projects that are not
consistent with the SCS, or are developed under an APS, could have
transportation funding withheld, which may result in an increased need for
privately financed transportation infrastructure (such as toll roads) to serve
developments that are found inconsistent. A prior version of the bill
would have explicitly prohibited the funding of inconsistent or APS projects,
but that language was altered.[24]

It is important to note that
neither the SCS nor APS directly affect or supersede local land use decisions,
and in neither case must local general plans, local specific plans, or local
zoning be consistent with the documents.[25] Although local planning agencies are encouraged to conform
their various planning documents with the SCS or APS, they are under no
obligation to do so.[26] The senate had no delusions that the success of SB 375 was
in the hands of the local governments, stating “[t]his bill is . . . built on
faith that cities and counties will voluntarily implement the SCS or at least
respond to regional political pressure to do so.”[27]

Although local governments are
given the choice of whether or not to comply with SB 375, the possibility of
losing federal transportation funds is serious. In addition, if regions develop
integrated land use, housing, and transportation plans that meet the SB 375 targets (either through
an SCS or APS) then new residential and mixed-use residential projects can be
relieved of certain review requirements imposed by CEQA.

B. CEQA Exemptions and Streamlining

In this incentive-driven legislation, the major “carrot”
dangled before both private and public developers is lessened burdens under
CEQA. SB 375 offers CEQA streamlining for two basic forms of compact
transit-based projects: residential or mixed-use projects consistent with SCS
(or APS), and transit priority projects.[28]

1. Residential or Mixed-Use Projects Consistent with SCS/APS

In its Environmental Impact Report (EIR), a residential or
mixed-use project that is consistent with the SCS/APS is not required to
discuss “growth-inducing impacts”[29] or GHG
effects from passenger vehicles and light truck trips nor include a less dense
alternative to reduce GHGs.[30]
However, this CEQA streamlining is minimal at best, and only applies to
projects containing at least seventy-five percent residential development.[31]

2. Transit Priority Projects

Transit Priority Projects (TPPs) must meet four requirements
to be eligible for various CEQA reprieves: 1) be consistent with an approved
SCS or APS; 2) contain at least fifty percent residential use; 3) have a
minimum net density of twenty units per acre; and 4) be located within one-half
mile of a major transit stop or high quality transit corridor included in a
RTP.[32]
Projects deemed TPPs are eligible for review under a Sustainable Communities
Environmental Assessment (SCEA), rather than a traditional EIR. This SCEA is
similar to already familiar CEQA streamlining documents, the Negative
Declaration and Mitigated Negative Declaration. Under a SCEA the project need
not: 1) consider prior cumulative effects mitigated in earlier EIRs; 2) repeat
the analysis of growth-inducing effects; or 3) repeat car and light truck
effects on GHG emissions or the regional transportation network. In addition,
the SCEA gains a higher level of deference in the courts, which employ the
substantial evidence standard and not a fair argument standard during review.[33]

In addition, some TPPs may meet more rigorous requirements
and be declared “sustainable communities projects,” making them completely
exempt from CEQA mandates.[34] For a
TTP to reach this level, the legislative body of the lead agency must conduct a
public hearing and find that eight environmental criteria, seven landuse
criteria, and one of three affordable housing criteria have all been met.[35]
Given the extent of these requirements, it is unlikely that many projects will
be deemed “sustainable communities projects” and qualify for full CEQA
exemption.

C. Housing Element Reform

SB 375 requires that planning
for transportation and housing occur together in order to reflect the necessary
balance between jobs and housing within a region. To accomplish this goal,
these historically separate planning areas are assessed together using the
regional employment projections in the applicable regional transportation plan.[36]
The bill extends the general plan housing element update period from five to
eight years, synchronizing it with the eight-year Regional Housing Needs
Allocation periods.[37] The
housing allocation plan must be consistent with the development pattern in the
SCS. Once the housing element has been submitted, local governments have three
years to rezone parcels to demonstrate consistency with the SCS. If they fail
to rezone within the three-year period, SB 375 provides two remedies: 1) a
private right of action to require rezoning within sixty days or to force the
local government to overturn the denial of a consistent project;[38]
or 2) the local government is simply not allowed to disapprove a housing
development project (or impose other discretionary measures to make the project
infeasible) if the project has at least forty-nine percent affordable housing.[39]
Not only may any interested person bring an action to require a city to
complete its rezoning within sixty days, the court may also impose sanctions on
the local government.[40] This
alignment of housing allocation and transportation planning, and the degree to
which it compels local governments to accommodate affordable housing, is one of
the most extraordinary aspects of SB 375.[41]

However, this is premised on the
existence of an approved SCS. By allowing an APS that is wholly separate from
the RTP, these mandates for internal consistency among the documents and the
smart growth priorities they represent could be lost.

Urban/suburban sprawl in the Los Angeles, California, area. Image used under Creative Commons from ATIS547.

III. Obstacles to Implementation

A. Feasibility and APS

The presence of an approved and adopted SCS incorporated
into the RTP is central to the success of SB 375. This document is the keystone
to administrative reconstruction and the harmonization it hopes to achieve, and
when removed the entire structure quickly falls apart. While it is true that
local governments are under no mandate to adopt either an SCS or APS as part of
their own General Plan, MPOs are required to include the SCS as part of their
RTP. If a particular region makes development of an SCS impossible under the
“feasibility” rubric, then an APS is required, effectively removing any
additional requirements under SB 375.

Not requiring the APS to be included in the RTP and instead
allowing it to be a separate document is a marked departure from many of the
original drafts of the statute. The ultimate exclusion of the APS from the RTP is the result of intense local government lobbying, allowing for regional
compliance under the law while leaving policy and funding choices unaffected
and areas under an APS with virtually no practical requirements under SB 375.
This concession fundamentally weakens the statute, but was likely necessary if
the bill was ever going to be adopted. The hope is that MPOs will agree with
the smart growth goals of SB 375 and develop “feasible” SCSs, or that CARB will
hold MPOs accountable if they try to skirt the requirement. Over the past year,
multiple workshops were held across the state to encourage local and regional
agencies to effectively implement SB 375.[42]

B. Permanent Funding Source

One of the biggest issues that must be overcome for this law
to reach its goals is funding. When SB 375 was passed, no source of funding was
identified for the additional duties the law requires of regional agencies.
Recently, the Southern California Association of Governments estimated the
agency would need $8 million to begin the implementation of SB 375, not taking
into account the costs incurred by local agencies for related planning
activities.[43]
Although the Legislature acknowledged the need for additional funding,
currently the only potential source of funding identified is $90 million in
Proposition 84 funds.[44]
However, these funds are designated for the planning and development of
sustainable communities in general, and many other government activities
besides SB 375 implementation are eligible for the $90 million.[45]
In addition, SB 375 requires a consistent, long-term funding stream since
regions have GHG emission reduction targets in both 2020 and 2035. The one-time
funding provided under Proposition 84 will likely not be sufficient.

Earlier this year, Senator Mark DeSaulnier introduced SB
406, which would provide permanent funding for SB 375. [46]
Under SB 406, if agencies elect to create an SCS, they could implement a $1 or
$2 surcharge on vehicle registration costs.[47] Some
counties oppose this funding scheme because certain regions may be unable to
pass resolutions to implement the surcharge, thus not allowing for uniform
funding opportunities statewide.[48]
Instead, they believe that since SB 375 is a state mandate, SB 406 should be
amended to allow for a funding mechanism implemented by a statewide fee, rather
than passing the burden to the regional governments.[49]

However, on October 11, 2009, Governor Schwarzenegger vetoed
SB 406, stating that although “reducing greenhouse gas emissions is of utmost
priority” the bill will impose a new fee on motor vehicle registration, and
“such an increase should be subject to voter approval.”[50]
Currently, SB 406 is back in the state senate’s “unfinished business” file
because of this veto.[51] The
Legislature reconvened in January of 2010 and did not have the two-thirds vote
of both houses required to override the Governor’s veto.

In addition to a need for a permanent funding stream to
support SB 375 level planning, other financial incentives will likely be needed
to encourage actual infill developers.[52]
Although SB 375 may remove some of the layers of red tape involved with an
infill project (see CEQA exemption discussion below), money for the aged public
infrastructure for infill is a huge cost which must be made cheaper. Lower permit
fees, competitive grants and loans, or more tax incentives may bring more
infill development.

C. CEQA Exemptions

Since it is clear that SB 375 is a “carrot” rather than a
“stick” statute, it is important that the incentives be strong. The
availability of CEQA streamlining benefits, the promise of reduced costs, and
greater regulatory certainty are vital to the implementation of SB 375.
Although state transportation funding “may” be unavailable for projects outside
of an SCS, many development projects would merely factor this potential cost
into their project plan. However, the possibility of true CEQA reprieve is much
more appealing. Unfortunately, by themselves the current SB 375 CEQA exemptions
have many limitations, and some revisions are likely necessary to attract
development to these transit areas. The problem is that the inclusion of CEQA
streamlining benefits was one of the statute’s most divisive compromises,
leading to a number of environmental groups withdrawing their support. Pushing
for further exceptions may alienate those environmental stakeholders still
championing the statute and its goals. The Legislature should tread carefully
but almost certainly will need to consider revisions to the CEQA incentives.

The most promising solutions include combining some of
CEQA’s other existing rules and exemptions for more powerful streamlining
incentives. Some possibilities are a Master EIR for the SCS/APS, the existing
infill exemption, and the “partial exemption” if coordinated with local
planning. Another possibility is loosening the restrictions on what projects
qualify for streamlining.

On the same day that Senator DeSaulnier introduced SB 406,
California State Assembly Member Kevin Jeffries introduced AB 782 as a bill to
extend the current CEQA exemptions under SB 375 to “any development project,
including, but not limited to, a residential or mixed-use residential project,
health facility, educational facility, retail facility, commercial job center,
or transportation project.”[53]
Although the CEQA revisions within AB 782 would allow for more successful
infill development, many groups are likely to oppose this new broad definition.
In addition, other sections of AB 782 are even more controversial (including
the prohibition of judicial review of CARB’s acceptance of an SCS/APS or a
local government agency’s determination that a project is consistent with an
approved SCS/APS) and are unlikely to pass through the rigorous gauntlet of SB
375 stakeholders. At the time of this Article’s publication, AB 782 had failed
to get the necessary votes to pass it out of committee and was not going to be
considered further during the current congressional session.[54]

High-density, mixed-use residential development in San Diego, California. Image used under Creative Commons from LA Wad.

Conclusion