In a lengthy, partially published opinion filed January 12, 2018, the First District Court of Appeal (Division 3) partly affirmed, but in large part reversed, the trial court’s judgment granting a writ of mandate directing the City of Los Angeles to set aside its FEIR certification and approval of BNSF Railway Company’s (“BNSF”) project to construct a new intermodal railyard facility, near the Port of Los Angeles, to handle containerized cargo transported through the ports of Long Beach and Los Angeles.  City of Long Beach, et al., Xavier Becerra (Attorney General, as Intervener) v. City of Los Angeles, (BNSF Railway Company, Real Party in Interest) (2018) ___ Cal.App.5th ___.

In many respects, this case is typical of CEQA litigation that involves a major, highly controversial infrastructure project, myriad parties and a multitude of hotly litigated and highly technical issues:  the project dates back well over a decade, the FEIR is over 5,000 pages long, the administrative record exceeds 200,000 pages, and the trial court’s rulings on the issues exceeds 200 pages.  CEQA practitioners know that in cases like this one appeals are a virtual certainty, and that victories are often not measured by unqualified reversals, but by prevailing in court on enough of the major or “big ticket” issues to pave the way for a practical “fix” of whatever relatively minor EIR deficiencies may remain.  So it appears here.  While following the Court of Appeal’s decision the EIR certification and project approvals for BNSF’s railyard project will remain set aside and project activities suspended pending correction of the EIR’s inadequate analysis of ambient air pollutant concentrations and related cumulative impacts, the opinion nonetheless represents a major CEQA victory for appellants – a victory tellingly reflected in the opinion’s concluding directive that the “parties shall bear their respective costs on appeal.”

BNSF’s railyard project itself is an interesting and important one from both an economic and environmental perspective.  Not a little ironically, given the Attorney General’s position, it is in many ways perfectly conceived to achieve greater efficiency and significant reductions in the emission of greenhouse gases and other fossil fuel emissions, as required by State policy embodied since 2006 in AB 32 and its statutory and judicial progeny.  As with all projects analyzed under CEQA, key to properly evaluating the project’s environmental effects is understanding the existing environmental setting upon which it will operate if built.  The Ports of Long Beach and Los Angeles currently handle up to 64% of all West Coast oceanic shipping, and 35% of all such shipping in the United States.  Most of the goods are shipped in containers aboard container ships, and off-loaded at marine terminals.  Some containers are off-loaded immediately onto trains (“on-dock rail”), and some onto truck chassis (trailers designed to hold containers) to be either hauled to their final destination, or drayed to a railyard outside the marine terminal (either “near-dock” or “off-dock” rail, depending on its distance from the terminal) where they are combined and transported by rail with other cargo bound for the same destination.  As of 2008, the Ports were served by 9 “on-dock” railyards, one “near dock” railyard (a Union Pacific facility 5 miles away), and 2 “off-dock” railyards (real party BNSF’s Hobart Yard and Union Pacific’s East Los Angeles Yard).  The 2 “off-dock” railyards are both about 24 miles away and handle the majority of the Ports’ containers, which are shipped by truck generally via the I-710 freeway.

With this context in mind, BNSF’s project proposed a 153-acre “near-dock” railyard only 4 miles from the Ports, known as the Southern California International Gateway Project (“SCIG”), to which it would transfer 95% of the intermodal container transport activities currently conducted through its Hobart Yard.  Given that the SCIG project is expected to handle approximately 2 million container truck trips from the Ports annually, it seems obvious that replacing 95% of the truck trips that would otherwise travel 24 miles each way to and from the Hobart Yard with trips traveling 4 miles each way to and from SCIG could provide significant environmental benefits in the areas of GHG emissions, air quality and transportation.  But a project with “big picture” environmental benefits can – and often does – also have more localized environmental detriments that must also be adequately analyzed under CEQA.  Enter the California Attorney General, the City of Long Beach, the South Coast Air Quality Management District, the Long Beach Unified School District, and a coalition of environmental and environmental justice NGOs, all of which filed suit under CEQA seeking to stop the SCIG project.  In the litigation that ensued, the trial judge (Complex Civil Litigation Judge Barry Goode of the Contra Costa County Superior Court, where the litigation was transferred) largely agreed with plaintiffs’ arguments and found deficiencies in the FEIR’s project description and in its analysis of indirect and growth-inducing impacts, noise, traffic, and air quality impacts, and GHG emissions impacts.  Interestingly, environmental and environmental justice groups lined up on both sides of the litigation.  On appeal, amicus curiae weighing in with briefs supporting Appellants City of Los Angeles and BNSF included California Communities Against Toxics, California Safe Schools, Communities for a Better Environment, Del Amo Action Committee, Mothers of East Los Angeles, NAACP, Wilmington-San Pedro, the Regents of the University of California, the Los Angeles Coalition for the Economy and Jobs, and the Association of American Railroads.

Key takeaways from the published portions of the Court of Appeal’s opinion include:

• Exhaustion of administrative remedies is a jurisdictional prerequisite to a CEQA action under Public Resources Code § 21177, which requires the exact issue litigated to first be raised to the lead agency with sufficient specificity for it to evaluate and respond to the objection. However, under section 21177(d)’s plain and unambiguous language, the Attorney General is unqualifiedly exempt from CEQA’s exhaustion requirements.  Accordingly, the Attorney General can litigate a CEQA action without appearing and objecting in the administrative proceedings, and is also free to raise in court new issues not previously raised by anyone in the administrative proceedings.  (Citing Maintain Our Desert Environment v. Town of Apple Valley (2004) 124 Cal.App.4th 430, 433.)  While excusing the Attorney General from CEQA’s issue exhaustion requirement creates the possibility that an EIR may be held inadequate based on a defect never brought to an agency’s attention and which it had no chance to correct, this result is compelled by the plain statutory language, is not inconsistent with the legislative history, and “is consistent with other statutory provisions that recognize the Attorney General’s unique authority to protect the environment of the State of California.”  (Citing Pub. Resources Code, § 21167.7; Gov. Code, §§ 12600(b), 12606.)
• The FEIR’s SCIG project description was not inaccurate or misleading for failure to discuss reasonably foreseeable indirect changes that could result at BNSF’s Hobart railyard. The trial court’s contrary finding fundamentally confused the required contents of an EIR’s project description (i.e., its description of the approved activity) with its analysis of that activity’s environmental impacts.  Contrary to Respondents’ improper characterization, the FEIR accurately stated BNSF would divert a portion of its operations from Hobart to SCIG, acknowledged Hobart cargo volumes would still continue to grow, and did not suggest Hobart capacity would not increase or would remain unchanged.
• Substantial evidence – in the form of worldwide and domestic intermodal business studies and related “reasoned expert predictions” – supported the City’s conclusions that a predicted amount of economic growth would occur with or without construction of SCIG, that SCIG is not necessary to enable BNSF to service projected growth at Hobart (which has capacity to meet all projected growth until at least 2035, and which BNSF can further expand as needed), and that any such growth is not an indirect impact of SCIG that the FEIR was required to study. BNSF already has the right to expand Hobart; freeing up capacity there by transferring intermodal traffic to SCIG may at most delay Hobart expansion, but the SCIG project will not cause Hobart expansion.
• The Court of Appeal also disagreed with the trial court’s findings that the FEIR’s composite emissions/”worst case” methodology for analyzing air emissions impacts, which was conducted in accordance with the harbor district’s protocol for criteria pollutant dispersion modeling, was misleading; it criticized the trial court’s use of an “unsupported hypothetical” to critique the methodology. But it did agree with the trial court that the FEIR’s analysis of ambient air pollution concentration impact was incomplete and omitted crucial information.  The FEIR showed that the “no project” alternative would have consistently lower NO_x, PM₁₀ and PM₅ emissions than the Project in benchmark years, and it acknowledged both the no project and project scenarios would result in significant and unavoidable “offsite ambient air pollutant concentrations” exceeding relevant SCAQMD thresholds.  But it did not adequately analyze or discuss the location, nature and duration of the existing and plus-project ambient PM₁₀ concentrations.  For example, data in the FEIR showed current PM₁₀ concentrations were greatest over the lengthy stretch of highway over a mile from the project site, but under SCIG they would be concentrated in the area immediately surrounding the project, which includes sensitive receptors such as homes and schools.  To provide an adequate basis for the decision makers to consider mitigation and alternatives, and to balance competing considerations before adopting a statement of overriding considerations, the FEIR needed to estimate and disclose the frequency and duration of when such localized ambient pollutant concentrations would exceed the significance threshold.  Without such information, the FEIR’s analysis of ambient pollutant concentrations was insufficient to foster informed public participation and reasoned decision-making, as “a [project] neighbor will have no idea how bad air quality will be, if the railyard is constructed, at any point or for how long in the future.”
• A deficiency also existed in the FEIR’s analysis of cumulative pollutant concentration impacts; while its conclusion of no significant cumulative non-cancer health risk was supported by the data, the FEIR failed to adequately analyze and disclose cumulative ambient air pollutant concentration impacts of the project together with a nearby Union Pacific project to modernize and expand its adjacent Intermodal Container Transfer Facility.
• Finally, again contrary to the trial court’s finding, the FEIR’s qualitative GHG emissions analysis was adequate under CEQA. A non-quantitative efficiency metric, as compared to use of a specific quantitative reduction goal, was an acceptable and appropriate methodology; per the Court:  “This analysis is particularly apt in this instance where the no project alternative also results in significant impacts and is not consistent with conservation goals.”  Substantial evidence supported the FEIR’s conclusion that the SCIG project would not conflict and is consistent with state and local plans and policies adopted to reduce GHG emissions.  The project would result in more efficient use of fossil fuels to move goods through increased use of rail versus trucking, a fundamental feature of SCIG that is consistent with CARB’s scoping plan for reducing GHG emissions from the Goods Movement sector.  By contrast, the no project alternative conflicts with state and local plans and policies for reducing GHG emissions, as it would not increase efficiency in cargo movement.

This case serves as a good reminder of the inevitable tension between, and sometimes conflicting environmental agendas of, “big picture” State GHG emissions and planning policies, on the one hand, and localized air quality thresholds and environmental justice concerns, on the other hand.  It underscores that CEQA requires an EIR to contain a complete and meaningful analysis and disclosure of all of a project’s significant environmental effects – even when the project will clearly have substantial environmental benefits that will allow the decision maker, after an adequate environmental analysis and “balancing” of benefits and detriments, to adopt a statement of overriding considerations and approve the project.  The Court of Appeal’s opinion also provides guidance to decision makers who must conduct highly technical and complex air pollution and GHG emissions computer modeling and studies, and marshal the resulting data to analyze the air quality impacts of a complex infrastructure project.   Decision makers and the public must be provided not just with insufficiently explained data, but with meaningful disclosures about the air quality impacts that affected sensitive receptors will experience if the project is approved.