Existing law provides that in a civil action brought by a plaintiff to challenge a housing development project that meets or exceeds the requirements for low- or moderate-income housing, a defendant may seek an order requiring the plaintiff to furnish an undertaking as security for costs and damages that may be incurred by the defendant if the bringing of the action or seeking by the plaintiff of particular relief, including injunctive relief, would result in a delay in carrying out the development project. Existing law requires this motion to be made on the grounds that (1) the action was brought in bad faith, vexatiously, to delay or thwart the low- or moderate-income nature of the housing development project and (2) the plaintiff will not suffer undue economic hardship by filing the undertaking. If the court determines, after hearing, that the grounds for the motion have been established, existing law requires the court to order the plaintiff to file an undertaking that may not exceed $500,000 as security for the defendants costs and damages.

This bill would require the motion described above to be made on the grounds that the action is without merit and that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project. The bill would permit the plaintiff, in responding to the motion, to seek to limit the amount of the undertaking by presenting evidence that filing the undertaking will cause the plaintiff to suffer undue economic hardship. The bill would require the court, in ordering the plaintiff to file such an undertaking, to take into consideration admitted evidence of the plaintiffs economic hardship and to avoid causing the plaintiff to suffer such hardship. The bill would authorize the court to decline to impose a bond on the plaintiff if the court determines that, based on the evidence, the bond would cause the plaintiff to suffer undue economic hardship.

Existing law provides that in a civil action brought by a plaintiff to challenge a housing development project that meets or exceeds the requirements for low- or moderate-income housing, a defendant may seek an order requiring the plaintiff to furnish an undertaking as security for costs and damages that may be incurred by the defendant if the bringing of the action or seeking by the plaintiff of particular relief, including injunctive relief, would result in a delay in carrying out the development project. Existing law requires this motion to be made on the grounds that (1) the action was brought in bad faith, vexatiously, to delay or thwart the low- or moderate-income nature of the housing development project and (2) the plaintiff will not suffer undue economic hardship by filing the undertaking. If the court determines, after hearing, that the grounds for the motion have been established, existing law requires the court to order the plaintiff to file an undertaking that may not exceed $500,000 as security for the defendants costs and damages.

This bill would require the motion described above to be made on the grounds that the action is without merit and that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project. The bill would permit the plaintiff, in responding to the motion, to seek to limit the amount of the undertaking by presenting evidence that filing the undertaking will cause the plaintiff to suffer undue economic hardship. The bill would require the court, in ordering the plaintiff to file such an undertaking, to take into consideration admitted evidence of the plaintiffs economic hardship and to avoid causing the plaintiff to suffer such hardship. The bill would authorize the court to decline to impose a bond on the plaintiff if the court determines that, based on the evidence, the bond would cause the plaintiff to suffer undue economic hardship.

Existing law provides that in a civil action brought by a plaintiff to challenge a housing development project that meets or exceeds the requirements for low- or moderate-income housing, a defendant may seek an order requiring the plaintiff to furnish an undertaking as security for costs and damages that may be incurred by the defendant if the bringing of the action or seeking by the plaintiff of particular relief, including injunctive relief, would result in a delay in carrying out the development project. Existing law requires this motion to be made on the grounds that (1) the action was brought in bad faith, vexatiously, to delay or thwart the low- or moderate-income nature of the housing development project and (2) the plaintiff will not suffer undue economic hardship by filing the undertaking. If the court determines, after hearing, that the grounds for the motion have been established, existing law requires the court to order the plaintiff to file an undertaking that may not exceed $500,000 as security for the defendants costs and damages.

This bill would require the motion described above to be made solely on the ground grounds that the action is without merit and that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project. The bill would permit the plaintiff, in responding to the motion, to seek to limit the amount of the undertaking by presenting evidence that filing the undertaking will cause the plaintiff to suffer undue economic hardship. The bill would require the court, in ordering the plaintiff to file such an undertaking, to take into consideration admitted evidence of the plaintiffs economic hardship and to avoid causing the plaintiff to suffer such hardship. The bill would authorize the court to decline to impose a bond on the plaintiff if the court determines that, based on the evidence, the bond would cause the plaintiff to suffer undue economic hardship.

Existing law provides that in a civil action brought by a plaintiff to challenge a housing development project that meets or exceeds the requirements for low- or moderate-income housing, a defendant may seek an order requiring the plaintiff to furnish an undertaking as security for costs and damages that may be incurred by the defendant if the bringing of the action or seeking by the plaintiff of particular relief, including injunctive relief, would result in a delay in carrying out the development project. Existing law requires this motion to be made on the grounds that (1) the action was brought in bad faith, vexatiously, to delay or thwart the low- or moderate-income nature of the housing development project and (2) the plaintiff will not suffer undue economic hardship by filing the undertaking. If the court determines, after hearing, that the grounds for the motion have been established, existing law requires the court to order the plaintiff to file an undertaking that may not exceed $500,000 as security for the defendants costs and damages.

This bill would require the motion described above to be made solely on the ground that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project. The bill would permit the plaintiff, in responding to the motion, to seek to limit the amount of the undertaking by presenting evidence that filing the undertaking will cause the plaintiff to suffer undue economic hardship. The bill would require the court, in ordering the plaintiff to file such an undertaking, to take into consideration admitted evidence of the plaintiffs economic hardship and to avoid causing the plaintiff to suffer such hardship. The bill would authorize the court to decline to impose a bond on the plaintiff if the court determines that, based on the evidence, the bond would cause the plaintiff to suffer undue economic hardship.

The California Environmental Quality Act requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment, or to adopt a negative declaration if it finds that the project will not have that effect. The act authorizes specified entities to file and maintain with a court an action or proceeding to attack, review, set aside, void, or annul an act of a public agency on grounds of noncompliance with the requirements of the act.

This bill would authorize a defendant, in an action brought pursuant to the act relating to a housing development project, to file a motion requesting the plaintiff or petitioner to identify every person or entity that contributes in excess of $10,000, as specified, toward the plaintiffs or petitioners costs of the action. The bill would authorize the motion to be heard on shortened time at the courts discretion. The bill would authorize a plaintiff or petitioner to request the courts permission to withhold the public disclosure of a person or entity who made a monetary contribution. The bill also would require the plaintiff or petitioner to use reasonable efforts to identify the actual persons or entities that are the true source of the contributions, to include the exact total amount contributed, and to identify any pecuniary or business interest related to the housing development project of any person or entity that contributes in excess of $10,000 to the costs of the action, as specified. The bill would would, except as provided, prohibit those disclosures from being admissible into evidence for any purpose. The bill would provide that a failure to comply with these requirements may be grounds for dismissal of the action by the court.

This bill would prohibit an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects, included in a master environmental impact report or other plan or project already approved following the completion of an environmental review, on grounds of noncompliance with the requirements of the act, as specified. The bill would provide that further environmental reviews are not subject to this provision.

The California Environmental Quality Act requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment, or to adopt a negative declaration if it finds that the project will not have that effect. The act authorizes specified entities to file and maintain with a court an action or proceeding to attack, review, set aside, void, or annul an act of a public agency on grounds of noncompliance with the requirements of the act.

This bill would require a plaintiff or petitioner, authorize a defendant, in an action brought pursuant to the act relating to a housing development project, to file a motion requesting the plaintiff or petitioner to disclose the identity of a identify every person or entity that contributes in excess of $5,000, $10,000, as specified, toward the plaintiffs or petitioners costs of the action. The bill would authorize a plaintiff or petitioner to request the courts permission to withhold the public disclosure of a person or entity who made a monetary contribution. The bill also would require the plaintiff or petitioner to use reasonable efforts to identify the actual persons or entities that are the true source of the contributions, to include the exact total amount contributed, and to identify any pecuniary or business interest related to the housing development project of any person or entity that contributes in excess of $5,000 $10,000 to the costs of the action, as specified. The bill would prohibit those disclosures from being admissible into evidence for any purpose. The bill would provide that a failure to comply with these requirements may be grounds for dismissal of the action by the court.

This bill would prohibit an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects, included in a master environmental impact report or other plan or project already approved following the completion of an environmental review, on grounds of noncompliance with the requirements of the act, as specified. The bill would provide that further environmental reviews are not subject to this provision.

The California Environmental Quality Act requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment, or to adopt a negative declaration if it finds that the project will not have that effect. The act authorizes specified entities to file and maintain with a court an action or proceeding to attack, review, set aside, void, or annul an act of a public agency on grounds of noncompliance with the requirements of the act.

This bill would require a plaintiff or petitioner, in an action brought pursuant to the act relating to a housing development project, to disclose the identity of a person or entity that contributes in excess of $5,000, as specified, toward the plaintiffs or petitioners costs of the action. The bill also would require the plaintiff or petitioner to use reasonable efforts to identify the actual persons or entities that are the true source of the contributions, to include the exact total amount contributed, and to identify any pecuniary or business interest related to the project of any person or entity that contributes in excess of $5,000 to the costs of the action, as specified. The bill would provide that a failure to comply with these requirements may be grounds for dismissal of the action by the court.

This bill would prohibit an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects, included in a master environmental impact report or other plan or project already approved following the completion of an environmental review, on grounds of noncompliance with the requirements of the act, as specified. The bill would provide that further environmental reviews are not subject to this provision.

The California Environmental Quality Act requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment, or to adopt a negative declaration if it finds that the project will not have that effect. The act authorizes specified entities to file and maintain with a court an action or proceeding to attack, review, set aside, void, or annul an act of a public agency on grounds of noncompliance with the requirements of the act.

This bill would require a plaintiff or petitioner, in an action brought pursuant to the act, act relating to a housing development project, to disclose the identity of a person or entity that contributes in excess of $1,000, $5,000, as specified, toward the plaintiffs or petitioners costs of the action. The bill also would require the plaintiff or petitioner to identify any pecuniary or business interest related to the project of any person or entity that contributes in excess of $1,000 $5,000 to the costs of the action, as specified. The bill would provide that a failure to comply with these requirements may be grounds for dismissal of the action by the court.

This bill would prohibit an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects projects, included in a master environmental impact report or other plan or project already approved following the completion of an environmental review, on grounds of noncompliance with the requirements of the act, as specified. The bill would provide that further environmental reviews are not subject to this provision.

The California Environmental Quality Act requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment, or to adopt a negative declaration if it finds that the project will not have that effect. The act authorizes specified entities to file and maintain with a court an action or proceeding to attack, review, set aside, void, or annul an act of a public agency on grounds of noncompliance with the requirements of the act.

This bill would require a plaintiff or petitioner, in an action brought pursuant to the act, to disclose the identity of a person or entity that contributes in excess of $1,000, as specified, toward the plaintiffs or petitioners costs of the action. The bill also would require the plaintiff or petitioner to identify any pecuniary or business interest related to the project of any person or entity that contributes in excess of $1,000 to the costs of the action, as specified. The bill would provide that a failure to comply with these requirements may be grounds for dismissal of the action by the court.

This bill would prohibit an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects on grounds of noncompliance with the requirements of the act, as specified.

 UNFINISHED BUSINESS  

Bill No: SB 393

Author: Glazer (D), et al.

Amended: 8/19/24

Vote: 21

PRIOR SENATE VOTES NOT RELEVANT

SENATE JUDICIARY COMMITTEE: 11-0, 8/28/24 (Pursuant to Senate Rule 29.10)

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Niello, Roth, Stern, Wahab

ASSEMBLY FLOOR: 77-0, 8/26/24 - See last page for vote

SUBJECT: Civil actions: housing development projects

SOURCE: Author

DIGEST:

This bill, in actions challenging certain low- or moderate-income housing projects, would shift the burden of demonstrating that posting a bond would place an undue economic hardship on the plaintiff from the defendant to the plaintiff.

Assembly Amendments

, completely change the bill’s provisions to provide that in actions challenging certain low- or moderate-income housing projects the plaintiff has the burden of demonstrating that posting a bond would place an undue economic hardship on them.

ANALYSIS:

Existing law:

1. Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration, mitigated declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines). (Pub. Res. Code § 21100 et seq.)
2. Sets requirements relating to the preparation, review, comment, approval and certification of environmental documents, as well as procedures relating to an action or proceeding to attack, review, set aside, void, or annul various actions of a public agency on the grounds of noncompliance with CEQA. (Pub. Res. Code § 21165 et seq.)
3. Authorizes judicial review of CEQA actions taken by public agencies, following the agency’s decision to carry out or approve the project, and specifies certain time periods in which an action must be instituted depending on the type of claim alleged. (Pub. Res. Code § 21167.)
4. Requires the superior court and court of appeal to provide lawsuits related CEQA preference over all other civil actions therein, in the matter of setting the same for hearing or trial, and in hearing the same, to the end that the action or proceeding is to be quickly heard and determined. (Pub. Res. Code § 21167.1(a).)
5. Provides that in all civil actions, including those brought by any plaintiff to challenge a housing development project which is a development project which meets or exceeds the requirements for low- or moderate-income housing, a defendant may apply to the court by noticed motion for an order requiring the plaintiff to furnish an undertaking as security for costs and any damages that may be incurred by the defendant by the conclusion of the action or proceeding as the result of a delay in carrying out the development project if the bringing of the action has the effect of preventing or delaying the project from being carried out. (Code of Civ. Proc. § 529.9.)
6. Provides that a plaintiff seeking a security in accordance with 5), above, must make a motion for that security on the grounds that:
   1. the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project; and
   2. the plaintiff will not suffer undue economic hardship by filing the undertaking. (Ibid.)
7. Authorizes a defendant, in any litigation pending in any court of this state and at any time until final judgment is entered, to move the court upon a notice and a hearing for an order requiring the plaintiff to furnish security.
   1. Provides that the motion for an order requiring the plaintiff to furnish security must be based upon the ground, and supported by a showing, that the plaintiff is a vexatious litigant and that there is not a reasonable probability that they will prevail in the litigation against the moving defendant. (Code of Civ. Proc. § 391.1.)
8. Defines a “vexatious litigant” as a person who does any of the following:
   1. in the immediately preceding seven-year period has commenced, prosecuted, or maintained in propria persona at least five litigations, other than in a small claims court that have been finally determined adversely to the person or unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing;
   2. after a litigation has been finally determined against the person, repeatedly relitigates or attempts to relitigate, in propria persona, either the validity of the determination against the same defendant or defendants as to whom the litigation was finally determined or the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by the final determination against the same defendant or defendants as to whom the litigation was finally determined;
   3. in any litigation while acting in propria persona, repeatedly files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay; or
   4. has previously been declared to be a vexatious litigant by any state or federal court of record in any action or proceeding based upon the same or substantially similar facts, transaction, or occurrence. (Code of Civ. Proc. § 391 (b).)

This bill:

1. Requires a motion by a defendant seeking a plaintiff to post a bond in certain actions challenging certain low- or moderate-income housing projects to additionally demonstrate that the action is without merit.
2. Authorizes a plaintiff, in response to a motion seeking an undertaking, to seek to limit the amount of the undertaking by presenting admissible evidence that filing an undertaking will cause it, and in cases where the plaintiff is an unincorporated association, its members, to suffer undue economic hardship.
3. Specifies that the court should take into consideration any admitted evidence of plaintiff’s economic hardship and avoid causing the plaintiff to suffer undue economic hardship.
4. Specifies that if the court concludes, based on all of the admissible evidence presented, that a bond in any amount would cause the plaintiff undue economic hardship, the court can decline to impose a bond.

Comment

The author indicates this bill is in response to a situation that occurred in his district. In short, the City of Livermore approved a project that would result in 130 units of affordable housing to be built by Eden Housing, a private developer. A group opposing the project, Save Livermore Downtown (SLD), filed suit under CEQA in June 2021, alleging the city’s environmental study for the project was inadequate and not in compliance with the city’s downtown specific plan. According to news reports, SLD has spent over $1 million on mailers and advertising in opposition to the affordable housing project. The city and Eden Housing ultimately won at the trial court level; however, Eden Housing has stated that the delay had forced it to return $68 million in low-income housing tax credits it had received for the project. SLD appealed the trial court decision, but their appeal was rejected. In its ruling upholding the trial court decision, the appeals court wrote:

“With the trial court we conclude, ‘[t]his is not a close case.’ SLD’s contentions regarding the project’s consistency with the Downtown Specific Plan and its CEQA arguments lack merit, so much so that the inherent weakness of these claims further supports the trial court’s finding that SLD brought this action to delay the project.” (Save Livermore Downtown v. City of Livermore (2022) 87 Cal.App.5th 1116, 1138.)

During the trial court hearing, the city and Eden made a motion under Section 529.2 of the Code of Civil Procedure seeking for SLD to post a bond. Under existing law, the defendant, in this case the city, has the burden of showing that: (1) the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development; and (2) that posting a bond will not cause the plaintiff to suffer undue economic hardship. The trial court granted the motion for a bond after reviewing evidence provided by the city showing Save Livermore Downtown’s significant spending against the project. According to the author, requiring the defendant to show that the bond will not cause undue hardship is exceedingly difficult and that the only reason they were successful in this instance was due to inadvertent disclosures made by SDL publically regarding their financial situation. In light of this, the author seeks to instead place the burden on the plaintiff to show that the amount of the bond will cause the plaintiff, and in cases where the plaintiff is an unincorporated association its members, to suffer undue economic hardship. The bill also requires that defendant show that the action is without merit in addition to being brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development. The bill would specify that if the court concludes, based on all of the admissible evidence presented, that a bond in any amount would cause the plaintiff undue economic hardship, the court may decline to impose a bond.

In a recent U.S. Supreme Court Case, Americans for Prosperity Foundation v. Bonta ((2021) 141 S.Ct. 2373.), the Court held that the California Attorney General (AG) requirement that charities disclose their Schedule B to Form 990 when registering with the state facially violated the First Amendment. Schedule B requires non-profit organizations to disclose the names and addresses of donors who have contributed more than $5,000 in a particular tax year or, in certain cases, more than 2% of an organization’s total contributions and is filed with the federal government. The Court held that the standard of review to be applied in compelled disclosure situations is an exacting scrutiny standard, and wrote that under this standard there must be a “’substantial relation between the disclosure requirement and a sufficiently important governmental interest,’ and that the disclosure requirement be narrowly tailored to the interest it promotes.” (Id. at 2383-85; internal quotation marks omitted.) The court also stated that a law may be facially challenged and invalidated “as overbroad if a substantial number of its applications are unconstitutional.” (Id. at 2387.)

The Court found that preventing fraud by charities was a substantial governmental interest, stating that there was “no doubt that California has an important interest in preventing wrongdoing by charitable organizations.”(Id. at 2387.) However, the court found that the disclosure requirement was not narrowly tailored, pointing to the fact that the District Court found no concrete example of pre-investigation collection advancing the AG’s enforcement efforts. (Id. at 2386.) The Court noted that there were other methods available to the AG to collect such information, such as a subpoena or audit letter. (Ibid.) The AG argued to the Court that the disclosure requirement did not result in any widespread chilling of association rights, that the disclosures were confidential, and that there were no burdens placed on the donors because tax-exempt charities already provide their Schedule B form to the Internal Revenue Service. (Id. at 2387-88.) The Court found these arguments unpersuasive. The Court concluded that the protections of the First Amendment as it relates to freedom of association “are triggered not only by actual restrictions” on a person’s ability to join with other people to further a shared goal but also when there is a risk of a chilling effect on association. (Id. at 2389.)

It is unclear if this bill implicates the First Amendment as addressed in the cases above. It could be argued that this statute is not a compelled disclosure situation as a plaintiff is not required to provide evidence of their financials, but is merely authorized to provide that information to challenge a motion seeking an undertaking. Additionally, it could be argued that preventing frivolous litigation and stopping undue delay in the construction of affordable housing is an important state interest and that the provision is narrowly tailored. However, requiring the financials of members of an unincorporated association to be disclosed in order to challenge an undertaking may pose a risk of having a chilling effect on associations in a way that the cases above find violate the First Amendment.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 8/28/24)

Abundant Housing LA

California Building Industry Association

California Housing Partnership Corporation

Circulate San Diego

Eden Housing

Housing Action Coalition

Housing Trust Silicon Valley

SPUR

The Two Hundred for Homeownership

YIMBY Action

OPPOSITION: (Verified 8/28/24)

None received

ARGUMENTS IN SUPPORT: The author writes:

In recent years, the California Environmental Quality Act (CEQA) has been used by some plaintiffs to challenge affordable housing projects, often resulting in costly delays and financial burdens for developers. In response to these issues and to protect developers while also maintaining environmental safeguards, this bill will help affordable housing developers recoup the costs of litigation when plaintiffs bring a CEQA lawsuit against an affordable housing project in bad faith. Currently, an affordable housing developer facing a CEQA lawsuit can ask the court to require the plaintiff to post a bond of up to $500,000. The bond helps the developer recover losses incurred from a bad faith lawsuit. However, this tool to stop gamesmanship is difficult to use because the law requires the developer to prove the plaintiff will not be financially harmed by posting the bond. Such a requirement is unrealistic since a developer cannot reasonably know the plaintiff’s finances, especially if they file anonymously. In fact, a report found only one developer in California has been granted such a bond after the plaintiff accidentally admitted information about their finances. This bill balances the scales by, instead, allowing plaintiffs to show the court they would be financially harmed by the bond. The court will then consider this when deciding whether to grant the bond and the bond amount. It's a fairer, more effective solution to prevent CEQA abuse and keep essential housing projects moving forward.

The California Housing Partnership writes in support:

[…] SB 393 will provide some recourse for affordable housing providers facing these lawsuits — by amending an existing law that allows a court to require the plaintiff to post a $500,000 bond as security for costs and damages if the lawsuit was brought “in bad faith, vexatiously, for purpose of delay, or to thwart the low- or moderate-income nature of the housing development project.” While the law currently requires housing developers to prove plaintiffs can afford to pay these bonds (a difficult task, since these groups are often anonymous), this bill would shift the burden of proof to require those filing a lawsuit against a housing project to show why they do not have the ability to pay, instead.

This is smart policy. It will offer a small amount of redress to affordable housing providers forced to spend time and resources defending against spurious legal actions, while promoting the state’s goal of promoting housing.

ASSEMBLY FLOOR: 77-0, 8/26/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Cervantes, Ortega

Prepared by: Amanda Mattson / JUD. / (916) 651-4113

8/28/24 19:55:03

**** END ****

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 393 (Author:Glazer)

Version: August 19, 2024

Hearing Date: August 28, 2024

Fiscal: No

Urgency: No

AMConsultant:

PURSUANT TO SENATE RULE 29.10(d)

SUBJECT

California Environmental Quality Act: judicial challenge: identification of contributors: housing projects

DIGEST

This bill would, in actions challenging certain low- or moderate-income housing projects, shift the burden of demonstrating that posting a bond would place an undue economic hardship on the plaintiff from the defendant to the plaintiff.

EXECUTIVE SUMMARY

This bill is brought in response to a situation that occurred in the author’s district. An approved housing project in the City of Livermore was challenged as being in violation of CEQA. The trial court and appellate court ultimately found for the city and noted that the case was meritless and seemed to be brought for the sole purpose of delay.^[1] Under existing law, a defendant in an action challenging certain low- or moderate-income housing projects can file a motion seeking that the plaintiff post an undertaking; however, the defendant has the burden of proving that doing so will not place an undue economic hardship on the plaintiff. This bill seeks to shift that burden onto the plaintiff, under the argument that the plaintiff is the one who has the information to make such a showing.

Since this bill was originally heard in our Committee it was amended to completely change the bill’s provisions on June 3, 2024. As such, only letters received since that date will be reflected in this analysis. The bill is author sponsored and supported by the California Housing Partnership Corporation and Eden Housing. No opposition was timely submitted to the Committee.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration, mitigated declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines). (Pub. Res. Code § 21100 et seq.)
2. Sets requirements relating to the preparation, review, comment, approval and certification of environmental documents, as well as procedures relating to an action or proceeding to attack, review, set aside, void, or annul various actions of a public agency on the grounds of noncompliance with CEQA. (Pub. Res. Code § 21165 et seq.)
3. Authorizes judicial review of CEQA actions taken by public agencies, following the agency’s decision to carry out or approve the project, and specifies certain time periods in which an action must be instituted depending on the type of claim alleged. (Pub. Res. Code § 21167.)
4. Requires the superior court and court of appeal to provide lawsuits related CEQA preference over all other civil actions therein, in the matter of setting the same for hearing or trial, and in hearing the same, to the end that the action or proceeding is to be quickly heard and determined. (Pub. Res. Code § 21167.1(a).)

1. Provides that in all civil actions, including those brought by any plaintiff to challenge a housing development project which is a development project which meets or exceeds the requirements for low- or moderate-income housing, a defendant may apply to the court by noticed motion for an order requiring the plaintiff to furnish an undertaking as security for costs and any damages that may be incurred by the defendant by the conclusion of the action or proceeding as the result of a delay in carrying out the development project if the bringing of the action has the effect of preventing or delaying the project from being carried out. (Code of Civ. Proc. § 529.9.)
2. Provides that a plaintiff seeking a security in accordance with 5), above, must make a motion for that security on the grounds that:
   1. the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project; and
   2. the plaintiff will not suffer undue economic hardship by filing the undertaking. (Ibid.)
3. Authorizes a defendant, in any litigation pending in any court of this state and at any time until final judgment is entered, to move the court upon a notice and a hearing for an order requiring the plaintiff to furnish security.
   1. Provides that the motion for an order requiring the plaintiff to furnish security must be based upon the ground, and supported by a showing, that the plaintiff is a vexatious litigant and that there is not a reasonable probability that they will prevail in the litigation against the moving defendant. (Code of Civ. Proc. § 391.1.)
4. Defines a “vexatious litigant” as a person who does any of the following:
   1. in the immediately preceding seven-year period has commenced, prosecuted, or maintained in propria persona at least five litigations, other than in a small claims court that have been finally determined adversely to the person or unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing;
   2. after a litigation has been finally determined against the person, repeatedly relitigates or attempts to relitigate, in propria persona, either the validity of the determination against the same defendant or defendants as to whom the litigation was finally determined or the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by the final determination against the same defendant or defendants as to whom the litigation was finally determined;
   3. in any litigation while acting in propria persona, repeatedly files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay; or
   4. has previously been declared to be a vexatious litigant by any state or federal court of record in any action or proceeding based upon the same or substantially similar facts, transaction, or occurrence. (Code of Civ. Proc. § 391 (b).)

This bill:

1. Requires a motion by a defendant seeking a plaintiff to post a bond in certain actions challenging certain low- or moderate-income housing projects to additionally demonstrate that the action is without merit.
2. Authorizes a plaintiff, in response to a motion seeking an undertaking, to seek to limit the amount of the undertaking by presenting admissible evidence that filing an undertaking will cause it, and in cases where the plaintiff is an unincorporated association, its members, to suffer undue economic hardship.
3. Specifies that the court should take into consideration any admitted evidence of plaintiff’s economic hardship and avoid causing the plaintiff to suffer undue economic hardship.
4. Specifies that if the court concludes, based on all of the admissible evidence presented, that a bond in any amount would cause the plaintiff undue economic hardship, the court can decline to impose a bond.

COMMENTS

1. Stated need for the bill

The author writes:

In recent years, the California Environmental Quality Act (CEQA) has been used by some plaintiffs to challenge affordable housing projects, often resulting in costly delays and financial burdens for developers. In response to these issues and to protect developers while also maintaining environmental safeguards, this bill will help affordable housing developers recoup the costs of litigation when plaintiffs bring a CEQA lawsuit against an affordable housing project in bad faith. Currently, an affordable housing developer facing a CEQA lawsuit can ask the court to require the plaintiff to post a bond of up to $500,000. The bond helps the developer recover losses incurred from a bad faith lawsuit. However, this tool to stop gamesmanship is difficult to use because the law requires the developer to prove the plaintiff will not be financially harmed by posting the bond. Such a requirement is unrealistic since a developer cannot reasonably know the plaintiff’s finances, especially if they file anonymously. In fact, a report found only one developer in California has been granted such a bond after the plaintiff accidentally admitted information about their finances. This bill balances the scales by, instead, allowing plaintiffs to show the court they would be financially harmed by the bond. The court will then consider this when deciding whether to grant the bond and the bond amount. It's a fairer, more effective solution to prevent CEQA abuse and keep essential housing projects moving forward.

1. CEQA generally

Enacted in 1970, CEQA requires state and local agencies to follow a set protocol to disclose and evaluate the significant environmental impacts of proposed projects and to adopt feasible measures to mitigate those impacts. CEQA itself applies to projects undertaken or requiring approval by public agencies, and, if more than one agency is involved, CEQA requires one of the agencies to be designated as the “lead agency.” The environmental review process required by CEQA consists of: (1) determining if the activity is a project; (2) determining if the project is exempt from CEQA; and (3) performing an initial study to identify the environmental impacts and, depending on the findings, prepare either a Negative Declaration (for projects with no significant impacts), a Mitigated Negative Declaration (for projects with significant impacts but that are revised in some form to avoid or mitigate those impacts), or an EIR (for projects with significant impacts).

An EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. Before approving any project that has received environmental review, an agency must make certain findings pertaining to the project’s environmental impact and any associated mitigation measures. If mitigation measures are required or incorporated into a project, the public agency must adopt a reporting or monitoring program to ensure compliance with those measures. To enforce the requirements of CEQA, a civil action may be brought under several code sections to attack, review, set aside, void, or annul the acts or decisions of a public agency for noncompliance with the act.

Unlike other environmental laws specific to air resources, water resources, or the control of toxic substances, there is no statewide bureaucracy charged with enforcement of CEQA. Rather, it is enforced through citizen participation and litigation if necessary. Arguably, this makes the implementation of CEQA more efficient and expeditious than if a state agency were created to administer the law. Thus, CEQA litigation could more appropriately be characterized as mere enforcement.

“CEQA operates, not by dictating proenvironmental outcomes, but rather by mandating that ‘decision makers and the public’ study the likely environmental effects of contemplated government actions and thus make fully informed decisions regarding those actions. … In other words, CEQA does not care what decision is made as long as it is an informed one.” (Citizens Coalition Los Angeles v. City of Los Angeles (2018) 26 Cal. App. 5th 561, 577.)

1. Bill is in response to a situation that has arisen in author’s district

The author indicates this bill is in response to a situation that occurred in his district. In short, the City of Livermore approved a project that would result in 130 units of affordable housing to be built by Eden Housing, a private developer. A group opposing the project, Save Livermore Downtown (SLD), filed suit under CEQA in June 2021, alleging the city’s environmental study for the project was inadequate and not in compliance with the city’s downtown specific plan. According to news reports, SLD has spent over $1 million on mailers and advertising in opposition to the affordable housing project. The city and Eden Housing ultimately won at the trial court level; however, Eden Housing has stated that the delay had forced it to return $68 million in low-income housing tax credits it had received for the project. SLD appealed the trial court decision, but their appeal was rejected. In its ruling upholding the trial court decision, the appeals court wrote:

“With the trial court we conclude, ‘[t]his is not a close case.’ SLD’s contentions regarding the project’s consistency with the Downtown Specific Plan and its CEQA arguments lack merit, so much so that the inherent weakness of these claims further supports the trial court’s finding that SLD brought this action to delay the project.” (Save Livermore Downtown v. City of Livermore (2022) 87 Cal.App.5^th 1116, 1138.)

During the trial court hearing, the city and Eden made a motion under Section 529.2 of the Code of Civil Procedure seeking for SLD to post a bond. Under existing law, the defendant, in this case the city, has the burden of showing that: (1) the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development; and (2) that posting a bond will not cause the plaintiff to suffer undue economic hardship. The trial court granted the motion for a bond after reviewing evidence provided by the city showing Save Livermore Downtown’s significant spending against the project. According to the author, requiring the defendant to show that the bond will not cause undue hardship is exceedingly difficult and that the only reason they were successful in this instance was due to inadvertent disclosures made by SDL publically regarding their financial situation. In light of this, the author seeks to instead place the burden on the plaintiff to show that the amount of the bond will cause the plaintiff, and in cases where the plaintiff is an unincorporated association its members, to suffer undue economic hardship. The bill also requires that defendant show that the action is without merit in addition to being brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development. The bill would specify that if the court concludes, based on all of the admissible evidence presented, that a bond in any amount would cause the plaintiff undue economic hardship, the court may decline to impose a bond. 

1. First amendment implications

In a recent U.S. Supreme Court Case, Americans for Prosperity Foundation v. Bonta ((2021) 141 S.Ct. 2373.), the Court held that the California Attorney General (AG) requirement that charities disclose their Schedule B to Form 990 when registering with the state facially violated the First Amendment. Schedule B requires non-profit organizations to disclose the names and addresses of donors who have contributed more than $5,000 in a particular tax year or, in certain cases, more than 2% of an organization’s total contributions and is filed with the federal government. The Court held that the standard of review to be applied in compelled disclosure situations is an exacting scrutiny standard, and wrote that under this standard there must be a “’substantial relation between the disclosure requirement and a sufficiently important governmental interest,’ and that the disclosure requirement be narrowly tailored to the interest it promotes.” (Id. at 2383-85; internal quotation marks omitted.) The court also stated that a law may be facially challenged and invalidated “as overbroad if a substantial number of its applications are unconstitutional.” (Id. at 2387.)

The Court found that preventing fraud by charities was a substantial governmental interest, stating that there was “no doubt that California has an important interest in preventing wrongdoing by charitable organizations.”(Id. at 2387.) However, the court found that the disclosure requirement was not narrowly tailored, pointing to the fact that the District Court found no concrete example of pre-investigation collection advancing the AG’s enforcement efforts. (Id. at 2386.) The Court noted that there were other methods available to the AG to collect such information, such as a subpoena or audit letter. (Ibid.) The AG argued to the Court that the disclosure requirement did not result in any widespread chilling of association rights, that the disclosures were confidential, and that there were no burdens placed on the donors because tax-exempt charities already provide their Schedule B form to the Internal Revenue Service. (Id. at 2387-88.) The Court found these arguments unpersuasive. The Court concluded that the protections of the First Amendment as it relates to freedom of association “are triggered not only by actual restrictions” on a person’s ability to join with other people to further a shared goal but also when there is a risk of a chilling effect on association. (Id. at 2389.)

A California appellate court recently applied the holding in Americans for Prosperity Foundation to a discovery request by the Public Utility Commission’s (PUC) Public Advocate’s Office (PAO) on Southern California Gas Company (SCG) related to whether the political activities of SCG are funded by SCG’s shareholders, which is permissible, or ratepayers, which is not permissible under existing law. The court held that the discovery request violated the First Amendment as applied to SCG because it infringed upon their freedom of association rights. (Southern California Gas Company v. Public Utilities Commission (2023) 87 Cal.App5th 324.) The court applied the exacting scrutiny standard as laid out under American for Prosperity Foundation and stated that a party objecting to a discovery request based on First Amendment rights has to make a prima facie showing that the enforcement of the request will result in harassment, membership withdrawal, or discouragement of new members or other consequences that objectively indicate an impact on or “chilling” of the members’ association rights. (Id. at 342-43.) If the petitioner can make the prima facie showing the burden shifts to the government to demonstrate that the disclosure serves a compelling government interest and is the least restrictive means of obtaining the requested information. (Id. at 343.)

The court stated that “a governmental entity seeking discovery must show that the information sought is highly relevant to the claims or defenses in the proceeding at hand” and that the information is essential to perform its duties. (Id. at 344-45.) Here, much like in the American for Prosperity Foundation case, the information to be disclosed would remain confidential but this was found unpersuasive by the court. They noted confidentiality was irrelevant to the matter because the evidence provided by SCG “demonstrates that the disclosure to the PAO itself would chill third parties from associating with the utility.” (Id. at 344.) SCG made this demonstration by providing evidence that disclosure would have a chilling effect on the ability of SCG to engage in activities that are lawful, and submitted declarations from organizations stating that the disclosure required by PAO would dissuade them from communicating or contracting with SCG.

It is unclear if this bill implicates the First Amendment as addressed in the cases above. It could be argued that this statute is not a compelled disclosure situation as a plaintiff is not required to provide evidence of their financials, but is merely authorized to provide that information to challenge a motion seeking an undertaking. Additionally, it could be argued that preventing frivolous litigation and stopping undue delay in the construction of affordable housing is an important state interest and that the provision is narrowly tailored. However, requiring the financials of members of an unincorporated association to be disclosed in order to challenge an undertaking may pose a risk of having a chilling effect on associations in a way that the cases above find violate the First Amendment.

1. Statements in support

The California Housing Partnership writes in support:

[…] SB 393 will provide some recourse for affordable housing providers facing these lawsuits — by amending an existing law that allows a court to require the plaintiff to post a $500,000 bond as security for costs and damages if the lawsuit was brought “in bad faith, vexatiously, for purpose of delay, or to thwart the low- or moderate-income nature of the housing development project.” While the law currently requires housing developers to prove plaintiffs can afford to pay these bonds (a difficult task, since these groups are often anonymous), this bill would shift the burden of proof to require those filing a lawsuit against a housing project to show why they do not have the ability to pay, instead.

This is smart policy. It will offer a small amount of redress to affordable housing providers forced to spend time and resources defending against spurious legal actions, while promoting the state’s goal of promoting housing.

SUPPORT

Abundant Housing LA

California Building Industry Association

California Housing Partnership Corporation

Circulate San Diego

Eden Housing

Housing Action Coalition

Housing Trust Silicon Valley

SPUR

The Two Hundred for Homeownership

YIMBY Action

OPPOSITION

None received

RELATED LEGISLATION

Pending Legislation: None known.

Prior Legislation: None known .

PRIOR VOTES

Assembly Floor (Ayes 77, Noes 0)

Assembly Judiciary Committee (Ayes 11, Noes 0)

This bill was amended on June 3, 2024, to completely change the bill’s provisions. All votes prior to this date are therefore irrelevant.

**************

1. Save Livermore Downtown v. City of Livermore (2022) 87 Cal.App.5^th 1116, 1138. ↑

SENATE THIRD READING

STR Bill Id:SB 393

Author:(Glazer)

As Amended Ver:August 19, 2024

Majority vote

SUMMARY

Shifts the burden of proving financial hardship related to the imposition of a financial undertaking during California Environmental Quality Act (CEQA) challenges to affordable housing projects from the defendant to the plaintiff.

Major Provisions

1. Clarifies that a motion to impose a financial undertaking upon the plaintiff in a CEQA challenge to an affordable housing project is to be made solely on the ground that the action lacks legal merit, was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project.
2. Authorizes a plaintiff to contest the imposition of a financial undertaking requested in accordance with 1), above.
3. Provides that a plaintiff seeking to limit the amount of the undertaking by presenting admissible evidence that filing an undertaking described in 1), above, to present evidence that providing the financial undertaking will cause it, and in cases where the plaintiff is an unincorporated association, its members, to suffer undue economic hardship.
4. Requires the court, when determining the amount of a financial undertaking a plaintiff must provide, to consider any admitted evidence of plaintiff's economic hardship and avoid causing the plaintiff to suffer undue economic hardship.
5. Provides that if the court concludes, based on all of the admissible evidence presented, that a financial undertaking in any amount would cause the plaintiff undue economic hardship, the court is authorized in its discretion to decline to impose the undertaking.

COMMENTS

The California Environmental Quality Act (CEQA) is frequently alleged to be a major detriment to new housing construction in California. Such claims are frequently overblown. In reality, a small handful of individuals or loosely affiliated local organizations have succeeded in slowing the progression of the development of several high profile affordable housing developments in recent years. The author and proponents of this measure contend that strengthening the existing laws related to the posting of a bond before one can litigate certain affordable housing projects would help deter lawsuits that are filed, not to enforce California's critical environmental laws, but to block affordable housing.

At its core, CEQA seeks to ensure that public agencies do not approve projects without considering the negative impacts a project may inflict on the environment. Although CEQA is too often, and incorrectly, viewed as a tool to skew outcomes in a manner that favors environmentalists and deters development, in reality, "CEQA operates, not by dictating proenvironmental outcomes, but rather by mandating that 'decision makers and the public' study the likely environmental effects of contemplated government actions and thus make fully informed decisions regarding those actions." (Citizens Coalition Los Angeles v. City of Los Angeles (2018) 26 Cal.App.5th 561, 577.) Thus, the primary objective of the environmental review required by CEQA is to steer agency decision makers into approving projects in a manner that utilizes feasible alternatives and mitigation measures to lessen the project's impact on the environment. The consideration of the impacts of a project is to be analyzed in the agency's environmental impact report. The failure to properly consider a project's impacts is what typically results in litigation.

Despite anecdotal complaints that California's laws generate significant numbers of "frivolous lawsuits," in practice California maintains a relatively strong set of laws to deter plaintiffs from repeatedly pursuing frivolous litigation. Under existing law, a party is deemed a "vexatious litigant" if they have lost, or failed to make significant progress in. litigating five claims or attempts to relitigate a final judgment against the same defendant over a seven-year period. Once a party is deemed to be a vexatious litigant, they are required to post a security bond at the commencement of litigation to cover all costs and damages incurred by the person who is sued by a vexatious litigant to ensure that if the litigant fails (again) to prove their case, the defendant will not be harmed. Additionally, should the vexatious litigant fail to adhere to specific orders issued by the court, including orders dictating how the litigant may file cases, the litigant can face significant court sanctions.

However, in the CEQA context, simply recovering legal costs and damages may be insufficient, especially if the litigation causes an affordable housing project to be abandoned completely. Accordingly, existing Code of Civil Procedure Section 529.2 permits a judge to impose a security on a plaintiff, at the request of a defendant, if the defendant can show the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart a low- or moderate-income housing development project. Existing law also prohibits the imposition of a financial security if doing so would be financial harmful to the plaintiff. By limiting these provisions to low and moderate-income projects, the existing law also targets those projects most desperately in need of construction, and most likely to be attacked by affluent neighbors.

This process, as it relates to the showing of financial hardship, requires the defendant to demonstrate the plaintiff will not suffer undue economic hardship by posting the bond. The proponents of this measure contend this provision unfairly forces defendants in CEQA lawsuits (the proponents of a project) to seek discovery and otherwise provide the court documentation about the plaintiff's finance they may not have. The proponents argue that this burden further delays projects and promotes even more litigation.

Recognizing the need for affordable housing, as noted, the existing Code of Civil Procedure Section 529.2 does permit the court to require a plaintiff suing an affordable housing development under CEQA to post a bond if the defendant makes such a motion unless such an action would result in undue economic hardship to the plaintiff. This bill would shift the burden of proving the plaintiff's financial hardship from the defendant back onto the plaintiff itself. The bill also clarifies that all evidence presented by the plaintiff regarding their inability to post a bond is to be considered by the court. Finally, the bill clarifies that the court may, in its discretion, set the amount of the bond.

This measure is the result of a long-delayed, and heavily litigated, housing project in the author's district. In 2008, the City of Livermore obtained land in its downtown core and decided to utilize the property to build a 130-unit affordable workforce housing project. (https://www.livermoreca.gov/departments/community-development/downtown/eden-housing-downtown.) By 2018, the city had designated a developer to build the project, and the developer successfully obtained a nearly $15 million grant from Alameda County to build the project. (Ibid.) In 2021, upon the completion of the project's CEQA documentation and other local development approvals, the project was sued for CEQA violations by a group utilizing the name, "Save Livermore Downtown." (Bob Egelko, Livermore voters could decide fate of hotly contested affordable housing project after ruling, S.F. Chronicle (Mar. 7, 2024) available at: https://www.sfchronicle.com/politics/article/livermore-affordable-housing-18712665.php.)

In seeking to defend the adequacy of the City of Livermore's CEQA processes, the City and Eden Housing (the project's chosen developer) moved to evoke the bonding provisions of the existing Code of Civil Procedure Section 529.2. The trial court grant the City's motion after reviewing evidence provided by the City highlighting Save Livermore Downtown's significant spending against the project. On appeal, not only did the City of Livermore prevail on the merits, but the court held, "Save Livermore Downtown was 'reported to have spent' more than $2,000,000 opposing the project; and Save Livermore Downtown had hired and was paying 'one of the largest and most expensive law firms in the country.'" The court held that this was sufficient evidence to uphold the bonding requirement. (Save Livermore Downtown v. City of Livermore (2022) 87 Cal. App. 5th 1116, 1136.)

Losing the CEQA case did not deter Save Downtown Livermore. The group subsequently began a petition gathering campaign to repeal the project's approval via the ballot. When the City of Livermore challenged the legality of the referendum, Save Livermore Downtown, apparently using a new name, once again demonstrated a willingness to use its financial largess to contest the project in court. In March 2024, the group prevailed on appeal and the referendum on the project is likely to appear on the November 2024 ballot. (Move Eden Housing v. City of Livermore (2024) 100 Cal. App. 5th 263.)

The downtown Livermore project highlights the multiple avenues opponents of affordable housing can utilize to attack development beyond CEQA, and the limitations of this bill. First, as demonstrated by the Court of Appeal's ruling in the Save Livermore Downtown the existing bonding statute worked. While proponents of this measure contend this was due to erroneous public disclosures by Save Livermore Downtown, it nonetheless suggests that the existing law does serve its purpose and a burden shift may not be wholly necessary. Furthermore, the fact that the Move Eden Housing case was also litigated shows that lessening CEQA litigation is not the silver bullet to developing affordable housing many advocates believe can be. If anything the Move Eden Housing case demonstrates that wealthy individuals who oppose affordable housing in their community will utilize as many resources and tools as possible to stop housing construction. The entirety of CEQA could be deleted, and one can surmise that the opponents of the City of Livermore's project would have been able to find other avenues to block and delay the project. Nonetheless, this bill focuses on a relatively narrow subset of plaintiffs in CEQA litigation, and to the extent that this measure impedes these groups from utilizing frivolous CEQA litigation, this bill may present a modest step forward in promoting affordable housing.

According to the Author

In recent years, the California Environmental Quality Act (CEQA) has been used by some plaintiffs to challenge affordable housing projects, often resulting in costly delays and financial burdens for developers. In response to these issues and to protect developers while also maintaining environmental safeguards, this bill will help affordable housing developers recoup the costs of litigation when plaintiffs bring a CEQA lawsuit against an affordable housing project in bad faith. Currently, an affordable housing developer facing a CEQA lawsuit can ask the court to require the plaintiff to post a bond of up to $500,000. The bond helps the developer recover losses incurred from a bad faith lawsuit. However, this tool to stop gamesmanship is difficult to use because the law requires the developer to prove the plaintiff will not be financially harmed by posting the bond. Such a requirement is unrealistic since a developer cannot reasonably know the plaintiff's finances, especially if they file anonymously. In fact, a report found only one developer in California has been granted such a bond after the plaintiff accidentally admitted information about their finances. This bill balances the scales by, instead, allowing plaintiffs to show the court they would be financially harmed by the bond. The court will then consider this when deciding whether to grant the bond and the bond amount. It's a fairer, more effective solution to prevent CEQA abuse and keep essential housing projects moving forward.

Arguments in Support

This measure is supported by a coalition of affordable housing advocates and developers. The members of the support coalition that jointly constitute the California Home Building Alliance write:

As housing providers, we have applauded the state's efforts in recent years to increase production of housing affordable to lower and middle-income households — including legislation that opens new sites for development, streamlines local approvals, and increases enforcement of state housing law. We know how critical our work is for achieving the state's housing goals, and we work closely with local elected officials to win approval for our projects, ensure they comply with local zoning, and fit into the character of the neighborhoods.

Nonetheless, we are continuing to see a growing number of environmental and other lawsuits from anonymous local groups opposed to good housing projects. These suits are often rejected by judges for having little to nothing to do with protecting the environment, but not before they cause years of delay that increase development costs, jeopardize funding awards,

SB 393 will provide some recourse for housing providers facing these lawsuits — by amending an existing law that allows developers to be awarded a $500,000 bond as security for costs and damages from a plaintiff when a court has ruled their lawsuit was brought "in bad faith, vexatiously, for purpose of delay, or to thwart the low- or moderate-income nature of the housing development project." While the law currently requires housing developers to prove plaintiffs can afford to pay these bonds (a difficult task, since these groups are often anonymous), this bill would shift the burden of proof to require those filing a lawsuit against a housing project to show why they do not have the ability to pay, instead.

This is smart policy. It will offer a small amount of redress to housing providers forced to spend time and resources defending against spurious legal actions, while promoting the state's goal of promoting housing in every community that is more affordable.

Arguments in Opposition

No opposition on file.

FISCAL COMMENTS

None.

VOTES

SENATE FLOOR: 32-0-8

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, McGuire, Menjivar, Newman, Nguyen, Niello, Ochoa Bogh, Portantino, Roth, Seyarto, Skinner, Stern, Umberg, Wiener, Wilk

ABS, ABST OR NV: Durazo, Laird, Limón, Min, Padilla, Rubio, Smallwood-Cuevas, Wahab

ASM JUDICIARY: 11-0-1

YES: Kalra, Dixon, Bauer-Kahan, Bryan, Connolly, Haney, Maienschein, McKinnor, Pacheco, Joe Patterson, Reyes

ABS, ABST OR NV: Sanchez

UPDATED

VERSION: August 19, 2024

CONSULTANT: Nicholas Liedtke / JUD. / (916) 319-2334 FN: 0003901

SENATE THIRD READING

STR Bill Id:SB 393

Author:(Glazer)

As Amended Ver:June 17, 2024

Majority vote

SUMMARY

Shifts the burden of proving financial hardship related to the imposition of a financial undertaking during California Environmental Quality Act (CEQA) challenges to affordable housing projects from the defendant to the plaintiff.

Major Provisions

1. Clarifies that a motion to impose a financial undertaking upon the plaintiff in a CEQA challenge to an affordable housing project is to be made solely on the ground that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project.
2. Authorizes a plaintiff to contest the imposition of a financial undertaking requested in accordance with 1), above.
3. Provides that a plaintiff seeking to limit the amount of the undertaking by presenting admissible evidence that filing an undertaking described in 1), above, to present evidence that providing the financial undertaking will cause it, and in cases where the plaintiff is an unincorporated association, its members, to suffer undue economic hardship.
4. Requires the court, when determining the amount of a financial undertaking a plaintiff must provide, to consider any admitted evidence of plaintiff's economic hardship and avoid causing the plaintiff to suffer undue economic hardship.
5. Provides that if the court concludes, based on all of the admissible evidence presented, that a financial undertaking in any amount would cause the plaintiff undue economic hardship, the court is authorized in its discretion to decline to impose the undertaking.

COMMENTS

The California Environmental Quality Act (CEQA) is frequently alleged to be a major detriment to new housing construction in California. Such claims are frequently overblown. In reality, a small handful of individuals or loosely affiliated local organizations have succeeded in slowing the progression of the development of several high profile affordable housing developments in recent years. The author and proponents of this measure contend that strengthening the existing laws related to the posting of a bond before one can litigate certain affordable housing projects would help deter lawsuits that are filed, not to enforce California's critical environmental laws, but to block affordable housing.

The CEQA process and potential court challenges. At its core, CEQA seeks to ensure that public agencies do not approve projects without considering the negative impacts a project may inflict on the environment. Although CEQA is too often, and incorrectly, viewed as a tool to skew outcomes in a manner that favors environmentalists and deters development, in reality, "CEQA operates, not by dictating proenvironmental outcomes, but rather by mandating that 'decision makers and the public' study the likely environmental effects of contemplated government actions and thus make fully informed decisions regarding those actions." (Citizens Coalition Los Angeles v. City of Los Angeles (2018) 26 Cal.App.5th 561, 577.) Thus, the primary objective of the environmental review required by CEQA is to steer agency decision makers into approving projects in a manner that utilizes feasible alternatives and mitigation measures to lessen the project's impact on the environment. The consideration of the impacts of a project is to be analyzed in the agency's environmental impact report. The failure to properly consider a project's impacts is what typically results in litigation.

Existing laws seeks to deter vexatious litigants from clogging the justice system with frivolous lawsuits. Despite anecdotal complaints that California's laws generate significant numbers of "frivolous lawsuits," in practice California maintains a relatively strong set of laws to deter plaintiffs from repeatedly pursuing frivolous litigation. Under existing law, a party is deemed a "vexatious litigant" if they have lost, or failed to make significant progress in. litigating five claims or attempts to relitigate a final judgment against the same defendant over a seven-year period. Once a party is deemed to be a vexatious litigant, they are required to post a security bond at the commencement of litigation to cover all costs and damages incurred by the person who is sued by a vexatious litigant to ensure that if the litigant fails (again) to prove their case, the defendant will not be harmed. Additionally, should the vexatious litigant fail to adhere to specific orders issued by the court, including orders dictating how the litigant may file cases, the litigant can face significant court sanctions.

However, in the CEQA context, simply recovering legal costs and damages may be insufficient, especially if the litigation causes an affordable housing project to be abandoned completely. Accordingly, existing Code of Civil Procedure Section 529.2 permits a judge to impose a security on a plaintiff, at the request of a defendant, if the defendant can show the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart a low- or moderate-income housing development project. Existing law also prohibits the imposition of a financial security if doing so would be financial harmful to the plaintiff. By limiting these provisions to low and moderate-income projects, the existing law also targets those projects most desperately in need of construction, and most likely to be attacked by affluent neighbors.

This process, as it relates to the showing of financial hardship, requires the defendant to demonstrate the plaintiff will not suffer undue economic hardship by posting the bond. The proponents of this measure contend this provision unfairly forces defendants in CEQA lawsuits (the proponents of a project) to seek discovery and otherwise provide the court documentation about the plaintiff's finance they may not have. The proponents argue that this burden further delays projects and promotes even more litigation.

This bill shifts the burden of proving financial hardship in CEQA litigation to the plaintiff. Recognizing the need for affordable housing, as noted, the existing Code of Civil Procedure Section 529.2 does permit the court to require a plaintiff suing an affordable housing development under CEQA to post a bond if the defendant makes such a motion unless such an action would result in undue economic hardship to the plaintiff. This bill would shift the burden of proving the plaintiff's financial hardship from the defendant back onto the plaintiff itself. The bill also clarifies that all evidence presented by the plaintiff regarding their inability to post a bond is to be considered by the court. Finally, the bill clarifies that the court may, in its discretion, set the amount of the bond.

The saga of Eden Housing, Save Livermore Downtown, and the many avenues to use legal tools to frustrate affordable housing. This measure is the result of a long-delayed, and heavily litigated, housing project in the author's district. In 2008, the City of Livermore obtained land in its downtown core and decided to utilize the property to build a 130-unit affordable workforce housing project. (https://www.livermoreca.gov/departments/community-development/downtown/eden-housing-downtown.) By 2018, the city had designated a developer to build the project, and the developer successfully obtained a nearly $15 million grant from Alameda County to build the project. (Ibid.) In 2021, upon the completion of the project's CEQA documentation and other local development approvals, the project was sued for CEQA violations by a group utilizing the name, "Save Livermore Downtown." (Bob Egelko, Livermore voters could decide fate of hotly contested affordable housing project after ruling, S.F. Chronicle (Mar. 7, 2024) available at: https://www.sfchronicle.com/politics/article/livermore-affordable-housing-18712665.php.)

In seeking to defend the adequacy of the City of Livermore's CEQA processes, the City and Eden Housing (the project's chosen developer) moved to evoke the bonding provisions of the existing Code of Civil Procedure Section 529.2. The trial court grant the City's motion after reviewing evidence provided by the City highlighting Save Livermore Downtown's significant spending against the project. On appeal, not only did the City of Livermore prevail on the merits, but the court held, "Save Livermore Downtown was 'reported to have spent' more than $2,000,000 opposing the project; and Save Livermore Downtown had hired and was paying 'one of the largest and most expensive law firms in the country.'" The court held that this was sufficient evidence to uphold the bonding requirement. (Save Livermore Downtown v. City of Livermore (2022) 87 Cal. App. 5th 1116, 1136.)

Losing the CEQA case did not deter Save Downtown Livermore. The group subsequently began a petition gathering campaign to repeal the project's approval via the ballot. When the City of Livermore challenged the legality of the referendum, Save Livermore Downtown, apparently using a new name, once again demonstrated a willingness to use its financial largess to contest the project in court. In March 2024, the group prevailed on appeal and the referendum on the project is likely to appear on the November 2024 ballot. (Move Eden Housing v. City of Livermore (2024) 100 Cal. App. 5th 263.)

The downtown Livermore project highlights the multiple avenues opponents of affordable housing can utilize to attack development beyond CEQA, and the limitations of this bill. First, as demonstrated by the Court of Appeal's ruling in the Save Livermore Downtown the existing bonding statute worked. While proponents of this measure contend this was due to erroneous public disclosures by Save Livermore Downtown, it nonetheless suggests that the existing law does serve its purpose and a burden shift may not be wholly necessary. Furthermore, the fact that the Move Eden Housing case was also litigated shows that lessening CEQA litigation is not the silver bullet to developing affordable housing many advocates believe can be. If anything the Move Eden Housing case demonstrates that wealthy individuals who oppose affordable housing in their community will utilize as many resources and tools as possible to stop housing construction. The entirety of CEQA could be deleted, and one can surmise that the opponents of the City of Livermore's project would have been able to find other avenues to block and delay the project. Nonetheless, this bill focuses on a relatively narrow subset of plaintiffs in CEQA litigation, and to the extent that this measure impedes these groups from utilizing frivolous CEQA litigation, this bill may present a modest step forward in promoting affordable housing.

According to the Author

In recent years, the California Environmental Quality Act (CEQA) has been used by some plaintiffs to challenge affordable housing projects, often resulting in costly delays and financial burdens for developers. In response to these issues and to protect developers while also maintaining environmental safeguards, this bill will help affordable housing developers recoup the costs of litigation when plaintiffs bring a CEQA lawsuit against an affordable housing project in bad faith. Currently, an affordable housing developer facing a CEQA lawsuit can ask the court to require the plaintiff to post a bond of up to $500,000. The bond helps the developer recover losses incurred from a bad faith lawsuit. However, this tool to stop gamesmanship is difficult to use because the law requires the developer to prove the plaintiff will not be financially harmed by posting the bond. Such a requirement is unrealistic since a developer cannot reasonably know the plaintiff's finances, especially if they file anonymously. In fact, a report found only one developer in California has been granted such a bond after the plaintiff accidentally admitted information about their finances. This bill balances the scales by, instead, allowing plaintiffs to show the court they would be financially harmed by the bond. The court will then consider this when deciding whether to grant the bond and the bond amount. It's a fairer, more effective solution to prevent CEQA abuse and keep essential housing projects moving forward.

Arguments in Support

This measure is supported by a coalition of affordable housing advocates and developers. The members of the support coalition that jointly constitute the California Home Building Alliance write:

As housing providers, we have applauded the state's efforts in recent years to increase production of housing affordable to lower and middle-income households — including legislation that opens new sites for development, streamlines local approvals, and increases enforcement of state housing law. We know how critical our work is for achieving the state's housing goals, and we work closely with local elected officials to win approval for our projects, ensure they comply with local zoning, and fit into the character of the neighborhoods.

Nonetheless, we are continuing to see a growing number of environmental and other lawsuits from anonymous local groups opposed to good housing projects. These suits are often rejected by judges for having little to nothing to do with protecting the environment, but not before they cause years of delay that increase development costs, jeopardize funding awards, and, in many cases, kill housing projects entirely.

SB 393 will provide some recourse for housing providers facing these lawsuits — by amending an existing law that allows developers to be awarded a $500,000 bond as security for costs and damages from a plaintiff when a court has ruled their lawsuit was brought "in bad faith, vexatiously, for purpose of delay, or to thwart the low- or moderate-income nature of the housing development project." While the law currently requires housing developers to prove plaintiffs can afford to pay these bonds (a difficult task, since these groups are often anonymous), this bill would shift the burden of proof to require those filing a lawsuit against a housing project to show why they do not have the ability to pay, instead.

This is smart policy. It will offer a small amount of redress to housing providers forced to spend time and resources defending against spurious legal actions, while promoting the state's goal of promoting housing in every community that is more affordable.

Arguments in Opposition

As noted this bill is opposed, unless amended, by the Planning and Conservation League. They write:

The proposed amendments to Section 529.2 (a) of the Code of Civil Procedure would shift the burden of proof to the plaintiff to demonstrate undue economic hardship, if a bond were imposed. Under current law, it is the responsibility of the bond seeker (the defendant) to prove that their motion would not result in economic hardship to the plaintiff. Cutting this requirement from 529.2 (a) would allow the defendant to bring such a motion arbitrarily, posing a significant obstruction and cost to nonprofit organizations and small community groups attempting to take warranted action.

We understand and appreciate the author's intent to constrain frivolous lawsuits. As written, however, this proposal would also greatly inhibit the abilities of many organizations working to protect the health of their communities and the environment. Often, these organizations lack the financial resources to meet the burden imposed by such a motion, meaning this bill would create a significant financial barrier to taking legitimate action for equity and environmental protection.

Nonprofit organizations and small community groups play a critical role in protecting public health and advancing environmental justice. By shifting the burden of proof onto these groups to prove that posting a bond would result in economic hardship, SB 393 harms people raising legitimate and warranted concerns and creates an inequitable financial barrier for participation in public decision-making.

Attempts to inhibit frivolous lawsuits should not impose significant potential financial penalties on the organizations taking warranted action to safeguard our public health, communities, and environment against legitimately harmful projects. We urge you to eliminate the proposed amendment to 529.2 (a) of the current law.

FISCAL COMMENTS

None.

VOTES

SENATE FLOOR: 32-0-8

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, McGuire, Menjivar, Newman, Nguyen, Niello, Ochoa Bogh, Portantino, Roth, Seyarto, Skinner, Stern, Umberg, Wiener, Wilk

ABS, ABST OR NV: Durazo, Laird, Limón, Min, Padilla, Rubio, Smallwood-Cuevas, Wahab

ASM JUDICIARY: 11-0-1

YES: Kalra, Dixon, Bauer-Kahan, Bryan, Connolly, Haney, Maienschein, McKinnor, Pacheco, Joe Patterson, Reyes

ABS, ABST OR NV: Sanchez

UPDATED

VERSION: June 17, 2024

CONSULTANT: Nicholas Liedtke / JUD. / (916) 319-2334 FN: 0003710

Date of Hearing: July 2, 2024

ASSEMBLY COMMITTEE ON JUDICIARY

Ash Kalra, Chair

SBPCA Bill Id:SB 393

Author:(Glazer) – As Amended Ver:June 17, 2024

SENATE VOTE: 32-0

SUBJECT: Civil actions: housing development projects

KEY ISSUE: should the burden to prove financial hardship regarding the imposition of a finanical undertaking be shifted from the defendant to the plaintiff in California environmental quality act lawsuits that challenge affordable housing?

SYNOPSIS

Originally enacted in 1970, and signed into law by then-Governor Ronald Reagan, the California Environmental Quality Act (CEQA) requires government agencies to consider the environmental impacts of governmental actions before approving plans, policies, or development projects. At its core, CEQA seeks to ensure that public agencies do not approve projects without considering the negative impacts a project may inflict on the environment. Although CEQA is too often, and incorrectly, viewed as a tool to skew outcomes in a manner that favors anti-development forces, the law is intended to ensure adequate government processes and ensure public participation in governmental decisions regarding development. Unfortunately, the negative perception of CEQA is largely driven by a small handful of bad actors who do abuse the law, by filing frivolous lawsuits in the name of the environment. As it relates to much needed affordable housing projects, recognizing the need to avoid frivolous litigation, the existing law already provides developers a hammer to stop frivolous litigation. The law enables affordable housing developers to request a court impose a financial undertaking on a vexatious plaintiff for an amount up to half a million dollars unless such an imposition would result in a financial hardship to the plaintiff.

This measure shifts the burden to prove the plaintiff’s financial hardship from the existing law’s provisions requiring the defendant to prove the plaintiff’s financial wherewithal, to instead require the plaintiff to prove their inability to post financial assurances. The bill makes minor technical changes to the scope of the evidence that the court must consider when evaluating the financial state of the plaintiff.

This author-sponsored measure is the result of protracted litigation originating in the Senator’s district. The bill is supported by a coalition of affordable housing advocates, developers, and builders. The proponents argue this bill will help impose an additional deterrence to frivolous CEQA challenges. The measure is opposed, unless amended, by the Planning and Conservation League who believe the bill will unfairly impact lower income communities by forcing them to prove their inability to pay a bond, or other financial assurance, in order to challenge development projects in court.

SUMMARY: Shifts the burden of proving financial hardship related to the imposition of a financial undertaking during California Environmental Quality Act challenges to affordable housing projects from the defendant to the plaintiff. Specifically, this bill:

1. Clarifies that a motion to impose a financial undertaking upon the plaintiff in a California Environmental Quality Act challenge to an affordable housing project is to be made solely on the ground that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project.
2. Authorizes a plaintiff to contest the imposition of a financial undertaking requested in accordance with 1).
3. Provides that a plaintiff seeking to limit the amount of the undertaking by presenting admissible evidence that filing an undertaking described in 1) to present evidence that providing the financial undertaking will cause it, and in cases where the plaintiff is an unincorporated association, its members, to suffer undue economic hardship.
4. Requires the court, when determining the amount of a financial undertaking a plaintiff must provide, to consider any admitted evidence of plaintiff’s economic hardship and avoid causing the plaintiff to suffer undue economic hardship.
5. Provides that if the court concludes, based on all of the admissible evidence presented, that a financial undertaking in any amount would cause the plaintiff undue economic hardship, the court is authorized in its discretion to decline to impose the undertaking.

EXISTING LAW:

1. Establishes the California Environmental Quality Act that, generally, requires a public agency to prepare, or cause to be prepared, and to certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have significant effects. (Public Resources Code Section 21100 et seq.)
2. Defines a “project” for the purpose of the California Environmental Quality Act as an activity that may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and includes any of the following:
   1. An activity directly undertaken by any public agency;
   2. An activity undertaken by a person which is supported, in whole or in part, through contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies; or
   3. An activity that involves the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies. (Public Resources Code Section 21065.)
3. Provides that an action or proceeding to attack, review, set aside, void, or annul the acts or decisions of a public agency on the grounds of noncompliance with the California Environmental Quality Act may be commenced when it is alleged that:
   1. A public agency is carrying out or has approved a project that may have a significant effect on the environment without having determined whether the project may have a significant effect on the environment;
   2. A public agency has improperly determined whether a project may have a significant effect on the environment;
   3. An environmental impact report prepared by, or caused to be prepared by, a public agency does not comply with the California Environmental Quality Act;
   4. A public agency has improperly determined that a project is not subject to the California Environmental Quality Act; or
   5. Any other act or omission of a public agency does not comply with the California Environmental Quality Act. (Public Resources Code Section 21167.)
4. Requires the superior court and court of appeal to provide lawsuits related to the California Environmental Quality Act preference over all other civil actions therein, in the matter of setting the same for hearing or trial, and in hearing the same, to the end that the action or proceeding shall be quickly heard and determined. (Public Resources Code Section 21167.1 (a).)
5. Requires counties with a population of over 200,000 to designate one or more judges to develop expertise concerning the California Environmental Quality Act and related land-use and environmental matters, and then assign such matters to that judge or those judges. (Public Resources Code Section 21167.1 (b).)
6. Provides that the California Environmental Quality Act does not apply to urban infill projects, as specified. (Public Resources Code Section 15332.)
7. Provides that in all civil actions, including those brought by any plaintiff to challenge a housing development project which is a development project which meets or exceeds the requirements for low- or moderate-income housing, a defendant may apply to the court by noticed motion for an order requiring the plaintiff to furnish an undertaking as security for costs and any damages that may be incurred by the defendant by the conclusion of the action or proceeding as the result of a delay in carrying out the development project if the bringing of the action has the effect of preventing or delaying the project from being carried out. (Code of Civil Procedure Section 529.9.)
8. Provides that a plaintiff seeking a security in accordance with 7) must make a motion for that security on the grounds that:
   1. The action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project, and
   2. The plaintiff will not suffer undue economic hardship by filing the undertaking. (Ibid.)
9. Permits in any litigation pending in any court of this state, at any time until final judgment is entered, a defendant to move the court, upon notice and hearing, for an order requiring the plaintiff to furnish security. Requires that the motion for an order requiring the plaintiff to furnish security must be based upon the ground, and supported by a showing, that the plaintiff is a vexatious litigant and that there is not a reasonable probability that they will prevail in the litigation against the moving defendant. (Code of Civil Procedure Section 391.1.)
10. Defines a “vexatious litigant” as a person who does any of the following:
    1. In the immediately preceding seven-year period has commenced, prosecuted, or maintained in propria persona at least five litigations, other than in a small claims court that have been finally determined adversely to the person or unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing;
    2. After a litigation has been finally determined against the person, repeatedly relitigates or attempts to relitigate, in propria persona, either the validity of the determination against the same defendant or defendants as to whom the litigation was finally determined or the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by the final determination against the same defendant or defendants as to whom the litigation was finally determined;
    3. In any litigation while acting in propria persona, repeatedly files unmeritorious motions, pleadings, or other papers, conducts unnecessary discovery, or engages in other tactics that are frivolous or solely intended to cause unnecessary delay; or
    4. Has previously been declared to be a vexatious litigant by any state or federal court of record in any action or proceeding based upon the same or substantially similar facts, transaction, or occurrence. (Code of Civil Procedure Section 391 (b).)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: The California Environmental Quality Act (CEQA) is frequently alleged to be a major detriment to new housing construction in California. Such claims are frequently overblown. In reality, a small handful of individuals or loosely affiliated local organizations have succeeded in slowing the progression of the development of several high profile affordable housing developments in recent years. The author and proponents of this measure contend that strengthening the existing laws related to the posting of a bond before one can litigate certain affordable housing projects would help deter lawsuits that are filed, not to enforce California’s critical environmental laws, but to block affordable housing. In support of this measure, the author states:

In recent years, the California Environmental Quality Act (CEQA) has been used by some plaintiffs to challenge affordable housing projects, often resulting in costly delays and financial burdens for developers. In response to these issues and to protect developers while also maintaining environmental safeguards, this bill will help affordable housing developers recoup the costs of litigation when plaintiffs bring a CEQA lawsuit against an affordable housing project in bad faith. Currently, an affordable housing developer facing a CEQA lawsuit can ask the court to require the plaintiff to post a bond of up to $500,000. The bond helps the developer recover losses incurred from a bad faith lawsuit. However, this tool to stop gamesmanship is difficult to use because the law requires the developer to prove the plaintiff will not be financially harmed by posting the bond. Such a requirement is unrealistic since a developer cannot reasonably know the plaintiff’s finances, especially if they file anonymously. In fact, a report found only one developer in California has been granted such a bond after the plaintiff accidentally admitted information about their finances. This bill balances the scales by, instead, allowing plaintiffs to show the court they would be financially harmed by the bond. The court will then consider this when deciding whether to grant the bond and the bond amount. It's a fairer, more effective solution to prevent CEQA abuse and keep essential housing projects moving forward.

The CEQA process and potential court challenges. At its core, CEQA seeks to ensure that public agencies do not approve projects without considering the negative impacts a project may inflict on the environment. Although CEQA is too often, and incorrectly, viewed as a tool to skew outcomes in a manner that favors environmentalists and deters development, in reality, “CEQA operates, not by dictating proenvironmental outcomes, but rather by mandating that ‘decision makers and the public’ study the likely environmental effects of contemplated government actions and thus make fully informed decisions regarding those actions.” (Citizens Coalition Los Angeles v. City of Los Angeles (2018) 26 Cal.App.5th 561, 577.) Thus, the primary objective of the environmental review required by CEQA is to steer agency decision makers into approving projects in a manner that utilizes feasible alternatives and mitigation measures to lessen the project’s impact on the environment. The consideration of the impacts of a project is to be analyzed in the agency’s environmental impact report. The failure to properly consider a project’s impacts is what typically results in litigation.

The process of finalizing an environmental impact report requires several steps. First the local lead agency must determine if a project qualifies for one of the many exemptions to CEQA provided in statute and the Office of Planning and Research’s regulations, more commonly known as the CEQA Guidelines. If no exemption exists, the lead agency must then begin to initially study the project in order to determine the scope of the project and associated environmental review. At this point if the agency believes no environmental impacts exist they may opt to file a negative declaration stating as much and proceed to approve the project. Once the scope of the project and review is properly determined, the environmental review is conducted and a draft environmental impact report is submitted for public comment. A lead agency must respond to all written comments on the environmental impact report received during the public comment period, and revise the environmental impact report as necessary. The responses to comments should explain why the comments are rejected or if the comment resulted in the adoption of a mitigation measure. Once the public review is completed the agency can certify the final environmental impact report.

Once a final environmental impact report is certified, and a project is subsequently approved, any litigation over the environmental review of the project can begin. Courts require an environmental impact report to make a good faith effort at fully disclosing the impacts of the project, provide a detailed set of information about project impacts and serve as the foundation for agency review. The court must review the environmental impact report in two ways. First a court must determine if the environmental impact report was prepared in a procedurally sufficient manner, as described above, and contains the proper content as required by law. Secondly, the court must determine the substantive aspect of its review and determine whether the conclusions and decisions made by the lead agency are based on substantial evidence in the record. (Vineyard Area Citizens v. City of Rancho Cordova (2007) 40 Cal.4th 412.)

Existing laws seeks to deter vexatious litigants from clogging the justice system with frivolous lawsuits. Despite anecdotal complaints that California’s laws generate significant numbers of “frivolous lawsuits,” in practice California maintains a relatively strong set of laws to deter plaintiffs from repeatedly pursuing frivolous litigation. Under existing law, a party is deemed a “vexatious litigant” if they have lost, or failed to make significant progress in. litigating five claims or attempts to relitigate a final judgment against the same defendant over a seven-year period. Once a party is deemed to be a vexatious litigant, they are required to post a security bond at the commencement of litigation to cover all costs and damages incurred by the person who is sued by a vexatious litigant to ensure that if the litigant fails (again) to prove their case, the defendant will not be harmed. Additionally, should the vexatious litigant fail to adhere to specific orders issued by the court, including orders dictating how the litigant may file cases, the litigant can face significant court sanctions.

However, in the CEQA context, simply recovering legal costs and damages may be insufficient, especially if the litigation causes an affordable housing project to be abandoned completely. Accordingly, existing Code of Civil Procedure Section 529.2 permits a judge to impose a security on a plaintiff, at the request of a defendant, if the defendant can show the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart a low- or moderate-income housing development project. Existing law also prohibits the imposition of a financial security if doing so would be financial harmful to the plaintiff. By limiting these provisions to low and moderate-income projects, the existing law also targets those projects most desperately in need of construction, and most likely to be attacked by affluent neighbors.

This process, as it relates to the showing of financial hardship, requires the defendant to demonstrate the plaintiff will not suffer undue economic hardship by posting the bond. The proponents of this measure contend this provision unfairly forces defendants in CEQA lawsuits (the proponents of a project) to seek discovery and otherwise provide the court documentation about the plaintiff’s finance they may not have. The proponents argue that this burden further delays projects and promotes even more litigation.

This bill shifts the burden of proving financial hardship in CEQA litigation to the plaintiff. Recognizing the need for affordable housing, as noted, the existing Code of Civil Procedure Section 529.2 does permit the court to require a plaintiff suing an affordable housing development under CEQA to post a bond if the defendant makes such a motion unless such an action would result in undue economic hardship to the plaintiff. This bill would shift the burden of proving the plaintiff’s financial hardship from the defendant back onto the plaintiff itself. The bill also clarifies that all evidence presented by the plaintiff regarding their inability to post a bond is to be considered by the court. Finally, the bill clarifies that the court may, in its discretion, set the amount of the bond.

The saga of Eden Housing, Save Livermore Downtown, and the many avenues to use legal tools to frustrate affordable housing. This measure is the result of a long-delayed, and heavily litigated, housing project in the author’s district. In 2008, the City of Livermore obtained land in its downtown core and decided to utilize the property to build a 130-unit affordable workforce housing project. (https://www.livermoreca.gov/departments/community-development/downtown/eden-housing-downtown.) By 2018, the city had designated a developer to build the project, and the developer successfully obtained a nearly $15 million grant from Alameda County to build the project. (Ibid.) In 2021, upon the completion of the project’s CEQA documentation and other local development approvals, the project was sued for CEQA violations by a group utilizing the name, “Save Livermore Downtown.” (Bob Egelko, Livermore voters could decide fate of hotly contested affordable housing project after ruling, S.F. Chronicle (Mar. 7, 2024) available at: https://www.sfchronicle.com/politics/article/livermore-affordable-housing-18712665.php.)

In seeking to defend the adequacy of the City of Livermore’s CEQA processes, the City and Eden Housing (the project’s chosen developer) moved to evoke the bonding provisions of the existing Code of Civil Procedure Section 529.2. The trial court grant the City’s motion after reviewing evidence provided by the City highlighting Save Livermore Downtown’s significant spending against the project. On appeal, not only did the City of Livermore prevail on the merits, but the court held, “Save Livermore Downtown was ‘reported to have spent’ more than $2,000,000 opposing the project; and Save Livermore Downtown had hired and was paying ‘one of the largest and most expensive law firms in the country.’” The court held that this was sufficient evidence to uphold the bonding requirement. (Save Livermore Downtown v. City of Livermore (2022) 87 Cal. App. 5th 1116, 1136.)

Losing the CEQA case did not deter Save Downtown Livermore. The group subsequently began a petition gathering campaign to repeal the project’s approval via the ballot. When the City of Livermore challenged the legality of the referendum, Save Livermore Downtown, apparently using a new name, once again demonstrated a willingness to use its financial largess to contest the project in court. In March 2024, the group prevailed on appeal and the referendum on the project is likely to appear on the November 2024 ballot. (Move Eden Housing v. City of Livermore (2024) 100 Cal. App. 5th 263.)

The downtown Livermore project highlights the multiple avenues opponents of affordable housing can utilize to attack development beyond CEQA, and the limitations of this bill. First, as demonstrated by the Court of Appeal’s ruling in the Save Livermore Downtown the existing bonding statute worked. While proponents of this measure contend this was due to erroneous public disclosures by Save Livermore Downtown, it nonetheless suggests that the existing law does serve its purpose and a burden shift may not be wholly necessary. Furthermore, the fact that the Move Eden Housing case was also litigated shows that lessening CEQA litigation is not the silver bullet to developing affordable housing many advocates believe can be. If anything the Move Eden Housing case demonstrates that wealthy individuals who oppose affordable housing in their community will utilize as many resources and tools as possible to stop housing construction. The entirety of CEQA could be deleted, and one can surmise that the opponents of the City of Livermore’s project would have been able to find other avenues to block and delay the project. Nonetheless, this bill focuses on a relatively narrow subset of plaintiffs in CEQA litigation, and to the extent that this measure impedes these groups from utilizing frivolous CEQA litigation, this bill may present a modest step forward in promoting affordable housing.

Recent United States Supreme Court precedent may impact the provisions of this bill. As a part of the burden shift related to demonstrating financial hardship and CEQA financial assurances, this bill requires plaintiffs, including those that are unincorporated associations, to demonstrate that they will be harmed by the imposition of a litigation bond. Unlike an incorporated group (including a local business, labor organization, or homeowner association), by definition the unincorporated association is made up of loosely affiliated individuals. In order for these individuals to demonstrate financial hardship, presumably, they’d be forced to disclose their identity to the court. Such a disclosure may violate the First Amendment’s protection on the freedom of association, especially as expanded by the court’s recent ruling in Americans for Prosperity Foundation v. Bonta (2021) 594 U.S. 595. In that decision, involving the California Attorney General’s requirement that charities disclose specified information regarding donors when registering with the state, the court held such a mandated disclosure was unconstitutional. The Court held that the standard of review to be applied in compelled disclosure situations is an exacting scrutiny standard, and wrote that under this standard there must be a “‘substantial relation between the disclosure requirement and a sufficiently important governmental interest,’ and that the disclosure requirement be narrowly tailored to the interest it promotes.” (Id. at p. 607.) The court also stated that a law may be facially challenged and invalidated “as overbroad if a substantial number of its applications are unconstitutional.” (Id. at 615.)

The court noted that California’s interest in charitable disclosures, and the need to prevent fraudulent activity, was an important interest but noted the California donor disclosure scheme was not narrowly tailored. (Id. at pp. 612-613.) Of note to this bill, the court determined that a “subpoena or audit letter” may have been a more narrowly tailored means of obtaining the donor information. (Ibid.)

Applying the Americans for Prosperity standards to this bill, one can certainly argue the preventing of frivolous litigation and stopping undue delay in the construction of affordable housing are important state interests. However, whether or not affirmatively forcing plaintiffs to disclose their identity and financial information is sufficiently narrowly tailored is less clear. The proponents of this bill note that filing a lawsuit is a more proactive measure than donating to a charity and thus this bill is narrowly tailored. However, a recent California Court of Appeal decision applied the Americans for Prosperity standard to invalidate a California Public Utilities Commission discovery request related to the political donations and shareholder contributions by the Southern California Gas Company, holding that the disclosure of shareholder information violated the freedom of association. (Southern California Gas Company v. Public Utilities Commission (2023) 87 Cal.App5th 324.) Similarly, the court itself in American for Prosperity noted its preference for subpoena, and a more targeted request for information, to the broader disclosure the Attorney General then required. Accordingly, the court may look more favorably upon the existing law’s framework whereby a defendant must prove the financial incapability of the plaintiff to post a bond. In this case, one could argue the defense would be forced to seek specific financial records than the more broad based disclosure required by this bill. Nonetheless, the bill applies to a relatively narrow group of plaintiffs, and is triggered only in a narrow set of circumstances. This may be sufficient for the bill to withstand constitutional muster.

One donation does not ensure another. By focusing this measure, in large part, on unincorporated associations, the bill targets groups that may not have a steady flow of income or even standalone financial accounts. Indeed, these loosely associated organizations likely rely on the largess of a small number of donors to fund their activities. While the benefactors behind Save Livermore Downtown appear to have few qualms about spending significant sums to advance the group’s aims, not all associations may be so lucky. This bill appears to assume that just because a group received one set of donations they will receive future donations. This may not always be the case. Thus forcing group members to disclose their financial information may produce sources of potential funding that an individual association member is not compelled to spend in advance of the group’s ongoing CEQA litigation. Accordingly, this bill may not actually provide the court with sufficiently relevant information to determine what, if any, bonding a CEQA plaintiff must provide.

ARGUMENTS IN SUPPORT: This measure is supported by a coalition of affordable housing advocates and developers. The members of the support coalition that jointly constitute the California Home Building Alliance write:

As housing providers, we have applauded the state’s efforts in recent years to increase production of housing affordable to lower and middle-income households — including legislation that opens new sites for development, streamlines local approvals, and increases enforcement of state housing law. We know how critical our work is for achieving the state’s housing goals, and we work closely with local elected officials to win approval for our projects, ensure they comply with local zoning, and fit into the character of the neighborhoods.

Nonetheless, we are continuing to see a growing number of environmental and other lawsuits from anonymous local groups opposed to good housing projects. These suits are often rejected by judges for having little to nothing to do with protecting the environment, but not before they cause years of delay that increase development costs, jeopardize funding awards, and, in many cases, kill housing projects entirely.

SB 393 will provide some recourse for housing providers facing these lawsuits — by amending an existing law that allows developers to be awarded a $500,000 bond as security for costs and damages from a plaintiff when a court has ruled their lawsuit was brought “in bad faith, vexatiously, for purpose of delay, or to thwart the low- or moderate-income nature of the housing development project.” While the law currently requires housing developers to prove plaintiffs can afford to pay these bonds (a difficult task, since these groups are often anonymous), this bill would shift the burden of proof to require those filing a lawsuit against a housing project to show why they do not have the ability to pay, instead.

This is smart policy. It will offer a small amount of redress to housing providers forced to spend time and resources defending against spurious legal actions, while promoting the state’s goal of promoting housing in every community that is more affordable.

ARGUMENTS IN OPPOSITION: As noted this bill is opposed, unless amended, by the Planning and Conservation League. They write:

The proposed amendments to Section 529.2 (a) of the Code of Civil Procedure would shift the burden of proof to the plaintiff to demonstrate undue economic hardship, if a bond were imposed. Under current law, it is the responsibility of the bond seeker (the defendant) to prove that their motion would not result in economic hardship to the plaintiff. Cutting this requirement from 529.2 (a) would allow the defendant to bring such a motion arbitrarily, posing a significant obstruction and cost to nonprofit organizations and small community groups attempting to take warranted action.

We understand and appreciate the author’s intent to constrain frivolous lawsuits. As written, however, this proposal would also greatly inhibit the abilities of many organizations working to protect the health of their communities and the environment. Often, these organizations lack the financial resources to meet the burden imposed by such a motion, meaning this bill would create a significant financial barrier to taking legitimate action for equity and environmental protection.

Nonprofit organizations and small community groups play a critical role in protecting public health and advancing environmental justice. By shifting the burden of proof onto these groups to prove that posting a bond would result in economic hardship, SB 393 harms people raising legitimate and warranted concerns and creates an inequitable financial barrier for participation in public decision-making.

Attempts to inhibit frivolous lawsuits should not impose significant potential financial penalties on the organizations taking warranted action to safeguard our public health, communities, and environment against legitimately harmful projects. We urge you to eliminate the proposed amendment to 529.2 (a) of the current law.

REGISTERED SUPPORT / OPPOSITION:

Support

Abode Communities
Abundant Housing LA
California Building Industry Association
California Housing Consortium
California Housing Partnership Corporation
Circulate San Diego
Eden Housing
Housing Action Coalition
Housing Trust Silicon Valley
Spur
The Two Hundred
YIMBY Action

Opposition

Planning and Conservation League (unless amended)

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 393

Author: Glazer (D), et al.

Amended: 5/4/23

Vote: 21

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 6-0, 3/15/23

AYES: Allen, Dahle, Gonzalez, Hurtado, Menjivar, Nguyen

NO VOTE RECORDED: Skinner

SENATE JUDICIARY COMMITTEE: 8-0, 5/2/23

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Niello, Stern, Wiener

NO VOTE RECORDED: Durazo, Laird, Min

SUBJECT: California Environmental Quality Act: judicial challenge: identification of contributors: housing projects

SOURCE: Author

DIGEST:

This bill requires a CEQA plaintiff to disclose any contributions he or she has received of $10,000 or more to help fund the legal action relating to a housing development project. It also prevents a CEQA action from being filed against a housing project that was included as part of a larger plan or project already approved under CEQA.

ANALYSIS:

Existing law:

1. Requires, pursuant to CEQA, lead agencies with the principal responsibility for carrying out or approving a project to prepare a negative declaration (ND), mitigated negative declaration (MND), or environmental impact report (EIR) for the project, unless the project is exempt from CEQA. (Public Resources Code (PRC) §21000 et seq.). If a project may have a significant effect on the environment, the lead agency must prepare a draft EIR. (CEQA Guidelines §15064(a)(1), (f)(1))
2. Establishes various timelines under which a person has a right to bring an action under CEQA. (PRC §21167)
3. Allows an agency to prepare a master EIR for certain projects, including when a project consists of “smaller projects that will be carried out in phases.” (PRC §21157 et seq.)
4. States that when a master EIR has been prepared and certified, it may allow for a limited agency review of subsequent projects that were described in the report (PRC §21157.1), though a master EIR cannot be used if it was certified more than five years before an application is filed or the subsequent project (PRC §21157.7)
5. Defines a “housing development project” to mean a use consisting of any of the following:
   1. Residential units only.
   2. Mixed-use developments consisting of residential and non-residential uses with at least two-thirds of the square footage designated for residential use.
   3. Transitional housing or supportive housing. (Government Code §65589.5(h)(2)

This bill:

1. Requires a plaintiff or petitioner bringing a CEQA action to provide the identity of any person or entity contributing $10,000 or more toward the plaintiff’s or petitioner’s costs of the action within seven days if the defendant makes a motion to receive this information. This information shall be kept confidential and not disclosed to anyone for 30 days.
2. Requires the plaintiff or petitioner to identify any pecuniary or business interest related to the project of any person or entity that contributes $10,000 or more to the costs of the action.
3. Allows a plaintiff or petitioner to ask the court to withhold the public disclosure of a contributor and the court can grant the request if it finds the public interest in keeping that information confidential clearly outweighs the public interest in disclosure.
4. Specifies that the information disclosed pursuant to this section shall not be admissible into evidence for any purpose.
5. Allows a court to take any action necessary to compel compliance with this section, including dismissing the action or proceeding.
6. Allows a person who contributes funds to file an action in their individual capacity, and not as a representative for an organization or association, to limit disclosure of their personal information to an in-camera review by the court.
7. Prevents a CEQA action from being filed against a housing project that was included as part of a plan or project already approved following the completion of an environmental review conducted under CEQA, including the resolution of any action brought against that prior environmental review.
8. Makes it clear that a housing project still must comply with obligations included in a previously approved plan or project to meet the requirements under CEQA.

Background

1. The A, B, C’s of CEQA. CEQA was enacted by the Legislature and signed into law by Governor Ronald Reagan in 1970. While it has evolved into a very complex Act over the past 53 years, at its core the basic principles of CEQA are relatively simple.

It is designed to (a) make government agencies and the public aware of the environmental impacts of a proposed project, (b) ensure the public can take part in the review process, and (c) identify and implement measures to mitigate or eliminate any negative impact the project may have on the environment.

CEQA is self-executing statute enforced by civil lawsuits that can challenge any project’s environmental review. Public agencies, as well as private individuals and organizations, can file lawsuits under CEQA.

1. Save Livermore Downtown v. City of Livermore. Back in 2004, Livermore adopted a general plan and a downtown specific plan for which it completed and certified an EIR. A subsequent EIR (SEIR) was certified in 2009, after the city amended its downtown specific plan to increase the amount of development allowed. Fast-forward to January 2018, when the city approved a plan for redeveloping city-owned sites in its downtown core to have a public park, commercial retail buildings, cultural facilities, multi-family workforce housing, a public parking garage, and a hotel. In May 2018, Eden Housing, a private developer, was selected to build 130 units of affordable housing as a part of that downtown core and an addendum to the 2009 SEIR was prepared in 2019, followed by two further addenda in 2020 when the project was modified.

The city approved the project in May 2021, finding it was both consistent with the SEIR that had been certified and was an infill development project.

A group opposing the project, Save Livermore Downtown (SLD), filed suit under CEQA in June 2021, alleging the city’s environmental study for the project was inadequate and not in compliance with the city’s downtown specific plan. According to news reports, SLD has spent over $1 million on mailers and advertising in opposition to the affordable housing project.

In February 2022, the Alameda County Superior Court rejected the lawsuit, stating in part the lawsuit was “almost utterly without merit.” While the city and Eden Housing won at the trial court level, Eden Housing stated at the time the delay had forced it to return $68 million in low-income housing tax credits.

SLD appealed the decision, but in December 2022, a three justice panel at the California 1^st District Court of Appeal voted unanimously to uphold the Alameda County Superior Court decision. The court found the project was indeed exempt from CEQA review and had met all of the tests in statute to qualify for the exemption. In its ruling upholding the trial court decision, the appeals court wrote:

“With the trial court we conclude, ‘[t]his is not a close case.’ SLD’s contentions regarding the project’s consistency with the Downtown Specific Plan and its CEQA arguments lack merit, so much so that the inherent weakness of these claims further supports the trial court’s finding that SLD brought this action to delay the project.”

On January 12, 2023, SLD filed a request to have the justices rehear their arguments and is awaiting a decision.

Simultaneously, a separate group – Move Eden Housing (MEH), which, according to the court, shares “a common promoter … and common litigation counsel” with SLD – collected signatures on a referendum in an attempt to force the city’s decision to build the affordable housing project to go before the voters. That referendum was submitted to the city in July 2022 and rejected by the city. MEH filed a lawsuit over that decision in August 2022.

On January 19, 2023, an Alameda County Superior Court judge rejected MEH’s argument, ruling the Livermore City Clerk acted within the law when she declined to process MEH signatures seeking the citywide vote. The judge noted the city council’s approval to sell land for the project to Eden was an administrative act — not a legislative act — and therefore not eligible for a public vote.MEH is considering appealing that decision as well.

1. CEQA Litigation. Current law requires every party filing a CEQA lawsuit to report to the Attorney General. According to a 2021 report compiled by The Housing Workshop, the number of CEQA lawsuits filed each year averaged 195 between 2002 and 2019 – with a high of 247 in 2008 and a low of 118 in 2005 (according to the Attorney General, 192 CEQA lawsuits were filed in 2020 and 211 were filed in 2021). The same report found the rate of litigation for challenges to projects alleging noncompliance with CEQA is low, with lawsuits filed for 2 out of every 100 projects. The estimated rate of litigation for all CEQA projects requiring an EIR, a MND, or an ND was 2% for the seven-year period from 2013 to 2019.

Comments

1. Purpose of bill. According to the author, “Under the California Environmental Quality Act (CEQA), individuals and entities can file lawsuits anonymously and without disclosing their donors’ identities or interests. As a result, many housing projects in particular face legal challenges from interests that have ulterior motives other than the environment. Unfortunately, an affordable housing project located in my district has been one of the latest victims of this abuse.

“According to the California Department of Housing and Community Development (HCD), the state must build over 2.5 million homes over the next eight-year cycle. No less than one million of those homes must be affordable to lower-income households. CEQA abuses can hinder the state from meeting its housing goals and local jurisdictions from meeting their Regional Needs Housing Assessment (RHNA) numbers. In order to provide more transparency into the CEQA litigation process, this bill would require plaintiffs or petitioners to disclose the identities of any donor who donates $1,000 or more towards the case. This will provide the court and the public with a better understanding of who is contributing to these efforts that, in many cases, deprive California residents from needed housing.”

1. Section One – Contributions. Section 1 of the bill requires a plaintiff or petitioner bringing a CEQA action to include an affidavit that discloses the identity of any person or entity contributing $10,000 or more supporting the action. This is somewhat analogous to the reporting mandated regarding campaign contributions, which is governed by the Political Reform Act (PRA) and the Fair Political Practices Commission (FPPC), but there are some issues addressed in the PRA and FPPC that are not addressed in this bill.
   1. Reporting Exact Amounts & Increases – Or Just Over $10,000? The bill requires the reporting of contributions of $10,000 or more, but it doesn’t clearly require the exact amount of the contribution to be reported. If, for example a person contributes $10,000 to support the CEQA lawsuit, they are reported to the court. However, if they subsequently make additional contributions toward the suit, it doesn’t appear the plaintiff or petitioner is required to disclose those additional contributions.

Under California election law and regulations adopted by FPPC, the cumulative totals of contributions to candidates for certain offices must be reported when the total exceeds $1,000.

• 1. Splitting & Laundering Contributions. Under the bill, there are ways a person or entity could avoid having to be reported by the plaintiff or petitioner as having made a $10,000 – or more – contribution in support of a CEQA suit. For example, a married couple could split a $10,000 contribution by giving $2,500 in each of their names and neither of them would have to be reported.

Similarly, an entity could take $90,000, split it between 10 people, have them all make $9,000 contributions, and nothing would have to be reported. The ability to split contributions in such a fashion may undermine the intent of the bill. California election law and regulations adopted by the FPPC try to prevent this problem by requiring the “true source” of each contribution to be reported.

To address this concern, the bill specifies that the plaintiff or petitionary shall use reasonable efforts to identify the actual persons or entities that are the true source of the contributions.

1. Section Two – Precluding Challenges Under CEQA Against Projects Approved As Part Of A Larger Plan Or Project. Generally on large or multi-phase projects, the proponent will complete a master EIR, which is designed to streamline the environmental review process of a project that may involve multiple pieces or phases. This allows the lead agency to conduct all of the environmental reviews up front and limits further reviews as each piece or phase is constructed.

For example, a master EIR could be used for a two-phase commercial and housing development. The master EIR would look at the environmental impacts of the two phases individually and collectively, and if it determined there were impacts in need of mitigation, those would be detailed and completed. If the commercial portion was developed first and the housing portion were developed two years later, the lead agency – two years later – would simply look to ensure nothing had changed from the assessment done in the master EIR prior to the project being built. If something had changed – perhaps the air pollution impact had been underestimated or now the housing development wanted to build more units – then those incremental impacts and changes would have to be addressed and, if appropriate, mitigated.

The use of a master EIR, however, does not preclude anyone from bringing an action against either the initial project or the sub-projects it contains.

SB 393 effectively states that once a master EIR has been certified and all actions against it have been disposed of, then – in cases where the master EIR involves a housing project – no subsequent actions can be filed against a sub-project that was approved as part of the original master EIR, unless the housing project is not consistent with the master EIR or if the master EIR is no longer valid for any reason.

The section does require a housing project to complete “further environmental study, including complying with all applicable public notice and comment requirements associated with that environmental review.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/3/23)

A Community of Friends
California Apartment Association
California Building Industry Association
Eden Housing
Housing Contractors of California

OPPOSITION: (Verified 5/3/23)

California Environmental Voters
Center for Biological Diversity
New Livable California Dba Livable California
SEIU California
Sierra Club California
State Building and Construction Trades Council of California
Teamsters Public Affairs Council
United Food and Commercial Workers, Western States Council

Prepared by: Evan Goldberg / E.Q. / (916) 651-4108

5/11/23 8:56:50

**** END ****

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 393 (Author:Glazer)

Version: April 10, 2023

Hearing Date: May 2, 2023

Fiscal: No

Urgency: No

Consultant: AM

SUBJECT

California Environmental Quality Act (CEQA): judicial challenge: identification of contributors: housing projects

DIGEST

This bill requires a plaintiff or petitioner in an action brought pursuant to CEQA relating to a housing development project, as defined, to disclose the identity of a person or entity that contributes in excess of $5,000 toward to cost of the action, as provided. The bill would provide that a failure to comply with these requirements may be grounds for dismissal of the action by the court. The bill also prohibits an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects, included in a master environmental impact report or other plan or project already approved following the completion of an environmental review, on grounds of noncompliance with CEQA, as specified, and that further environmental reviews are not subject to this provision.

EXECUTIVE SUMMARY

The author states this bill is intended to provide more transparency into the CEQA litigation process by requiring plaintiffs or petitioners to disclose the identities of any donor who donates more than $5,000 towards a case relating to a housing development project. This bill is similar to several other bills that have been introduced over the years, including the author’s SB 1341 (Glazer, 2018); however, they have all either not been set for a hearing or failed to get out of the committee of first referral. (See Prior Legislation, below.)

The bill is author sponsored and supported by several organizations, including those representing supportive housing, the rental housing industry, and realtors. The bill is opposed by various environmental and labor organizations, including Sierra Club California and SEIU California. The bill passed the Senate Environmental Quality Committee on a vote of 6 to 0.

PROPOSED CHANGES TO THE LAW

Existing state law:

1. Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration, mitigated declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines). (Pub. Res. Code § 21100 et seq.)^[1]
2. Sets requirements relating to the preparation, review, comment, approval and certification of environmental documents, as well as procedures relating to an action or proceeding to attack, review, set aside, void, or annul various actions of a public agency on the grounds of noncompliance with CEQA. (§ 21165 et seq.)
3. Authorizes judicial review of CEQA actions taken by public agencies, following the agency’s decision to carry out or approve the project, and specifies certain time periods in which an action must be instituted depending on the type of claim alleged. (§ 21167.)
4. Provides that upon motion, a court may award attorney fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if:
   1. a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons;
   2. the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate; and
   3. such fees should not in the interest of justice be paid out of the recovery, if any. (Code Civ. Proc. § 1021.5.)

This bill:

1. Requires a plaintiff or petitioner in an action brought pursuant to CEQA relating to a housing development project, as defined, to disclose the identity of a person or entity that contributes in excess of $5,000 toward to cost of the action.
   1. Provides that the plaintiff or petitioner has a continuing obligation throughout the course of the proceedings to identify any person or entity that has made a single or multiple contributions within seven days of receiving the contribution.
   2. Requires the plaintiff or petitioner to use reasonable efforts to identify the actual persons or entities that are the true source of the contributions.
   3. Defines housing development projects as a use consisting of any of the following:
      1. residential units only;
      2. mixed-use developments consisting of residential and nonresidential uses with at least two-thirds of the square footage designated for residential use; or
      3. transitional housing or supportive housing.
2. Requires the disclosure to include the exact total amount contributed and any pecuniary or business interest related to the project of any person or entity that contributes that contributes in excess of $5,000 toward to cost of the action.
3. Authorizes a plaintiff or petitioner to request the court’s permission to withhold the public disclosure of a contribution, and authorizes the court to grant the request if it finds that the public interest in keeping that information confidential clearly outweighs the public interest in disclosure.
4. Authorizes the court to, on its own motion or motion of any party, take any action necessary to compel compliance with these provisions, up to and including dismissal of the action by the court.
5. Individuals contributing funds have the right to limit disclosure of the individual’s personal information to an in-camera review by the court.
6. Authorizes the information disclosed to be used by a court to determine whether the financial burden of private enforcement supports the award of attorney’s fees under CEQA.
7. Prohibits an action of proceeding from being brought to attack, review, set aside, void, or annul an act or decision of a public agency for housing projects that are included in a master environmental impact report or other plan or project already approved following the completion of an environmental review on the grounds of noncompliance with CEQA.
   1. Further environmental reviews by a public agency for housing projects must continue to comply with all obligations under CEQA related to environmental review, including public notice and comment requirements.
   2. Further environmental reviews by a public agency for housing projects are subject to an action or proceeding to attack, review, set aside, void, or annul an act or decision of a public agency for noncompliance with CEQA.

COMMENTS

1. Stated need for the bill

The author writes:

Under the California Environmental Quality Act (CEQA), individuals and entities can file lawsuits anonymously and without disclosing their donors’ identities or interests. As a result, many housing projects in particular face legal challenges from interests that have ulterior motives other than the environment. Unfortunately, an affordable housing project located in my district has been one of the latest victims of this abuse. This project will provide 130 units of affordable housing and an estimated 13,000 families are on the waiting list. However, its construction has been stalled indefinitely from repeated challenges from a group called Save Livermore Downtown, despite the trial court and the appeals court affirming that the environmental concerns are “almost utterly without merit.” As a result, the project has lost $65 million in funding from the Low Income Housing Tax Credit Program. This case is not alone and there are many examples of such CEQA abuses across the state.

According to the California Department of Housing and Community Development (HCD), the state must build over 2.5 million homes over the next eight-year cycle. No less than one million of those homes must be affordable to lower-income households. CEQA abuses can hinder the state from meeting its housing goals and local jurisdictions from meeting their Regional Needs Housing Assessment (RHNA) numbers. In order to provide more transparency into the CEQA litigation process, this bill would require plaintiffs or petitioners to disclose the identities of any donor who donates more than $5,000 towards the case. This will provide the court and the public with a better understanding of who is contributing to these efforts that, in many cases, deprive California residents from needed housing.

1. CEQA generally

Enacted in 1970, CEQA requires state and local agencies to follow a set protocol to disclose and evaluate the significant environmental impacts of proposed projects and to adopt feasible measures to mitigate those impacts. CEQA itself applies to projects undertaken or requiring approval by public agencies, and, if more than one agency is involved, CEQA requires one of the agencies to be designated as the “lead agency.” The environmental review process required by CEQA consists of: (1) determining if the activity is a project; (2) determining if the project is exempt from CEQA; and (3) performing an initial study to identify the environmental impacts and, depending on the findings, prepare either a Negative Declaration (for projects with no significant impacts), a Mitigated Negative Declaration (for projects with significant impacts but that are revised in some form to avoid or mitigate those impacts), or an EIR (for projects with significant impacts).

An EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. Before approving any project that has received environmental review, an agency must make certain findings pertaining to the project’s environmental impact and any associated mitigation measures. If mitigation measures are required or incorporated into a project, the public agency must adopt a reporting or monitoring program to ensure compliance with those measures. To enforce the requirements of CEQA, a civil action may be brought under several code sections to attack, review, set aside, void, or annul the acts or decisions of a public agency for noncompliance with the act.

Unlike other environmental laws specific to air resources, water resources, or the control of toxic substances, there is no statewide bureaucracy charged with enforcement of CEQA. Rather, it is enforced through citizen participation and litigation if necessary. Arguably, this makes the implementation of CEQA more efficient and expeditious than if a state agency were created to administer the law. Thus, CEQA litigation could more appropriately be characterized as mere enforcement.

“CEQA operates, not by dictating proenvironmental outcomes, but rather by mandating that ‘decision makers and the public’ study the likely environmental effects of contemplated government actions and thus make fully informed decisions regarding those actions. … In other words, CEQA does not care what decision is made as long as it is an informed one.” (Citizens Coalition Los Angeles v. City of Los Angeles (2018) 26 Cal. App. 5th 561, 577.)

1. Bill is in response to a situation that has arisen in author’s district

The author indicates this bill is in response to a situation that occurred in his district. The Senate Environmental Quality Committee analysis provides background on the situation:

Back in 2004, Livermore adopted a general plan and a downtown specific plan for which it completed and certified an EIR. A subsequent EIR (SEIR) was certified in 2009, after the city amended its downtown specific plan to increase the amount of development allowed. Fast-forward to January 2018, when the city approved a plan for redeveloping city-owned sites in its downtown core to have a public park, commercial retail buildings, cultural facilities, multi-family workforce housing, a public parking garage, and a hotel. In May 2018, Eden Housing, a private developer, was selected to build 130 units of affordable housing as a part of that downtown core and an addendum to the 2009 SEIR was prepared in 2019, followed by two further addenda in 2020 when the project was modified.

The city approved the project in May 2021, finding it was both consistent with the SEIR that had been certified and was an infill development project.

A group opposing the project, Save Livermore Downtown (SLD), filed suit under CEQA in June 2021, alleging the city’s environmental study for the project was inadequate and not in compliance with the city’s downtown specific plan. According to news reports, SLD has spent over $1 million on mailers and advertising in opposition to the affordable housing project.

In February 2022, the Alameda County Superior Court rejected the lawsuit, stating in part the lawsuit was “almost utterly without merit.” While the city and Eden Housing won at the trial court level, Eden Housing stated at the time the delay had forced it to return $68 million in low-income housing tax credits.

SLD appealed the decision, but in December 2022, a three justice panel at the California 1st District Court of Appeal voted unanimously to uphold the Alameda County Superior Court decision. The court found the project was indeed exempt from CEQA review and had met all of the tests in statute to qualify for the exemption. In its ruling upholding the trial court decision, the appeals court wrote:

“With the trial court we conclude, ‘[t]his is not a close case.’ SLD’s contentions regarding the project’s consistency with the Downtown Specific Plan and its CEQA arguments lack merit, so much so that the inherent weakness of these claims further supports the trial court’s finding that SLD brought this action to delay the project.” [Save Livermore Downtown v. City of Livermore (2022) 87 Cal.App.5^th 1116, 1138.]

On January 12, 2023, SLD filed a request to have the justices rehear their arguments and is awaiting a decision.^[2]

1. The bill’s disclosure provisions may very likely violate the First Amendment of the U.S. Constitution

The First Amendment prohibits the government from “abridging the freedom of speech, or of the press; or the right of people peaceably to assemble, and to petition the Government for a redress of grievances.” The Court has “long understood as implicit in the right to engage in activities protected by the First Amendment a corresponding right to associate with others.” (Roberts v. U.S. Jaycees (1984) 468 U.S. 609, 622.) The Court has noted that “compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restrain on freedom of association as [any other] forms of governmental action” and that there is a “vital relationship between freedom to associate and privacy in one’s associations.” (NAACP v. Alabama ex. rel Patterson (1958) 357 U.S. 499, 462.) Under First amendment jurisprudence, a law can be challenged in two ways. It can be challenged as facially violating the First Amendment, meaning the law as written (on its face) is unconstitutional, or it can be argued that the law as-applied to a particular litigant violates the First Amendment. A law found to facially violate the First Amendment will be struck down entirely, whereas a law found to violate the First Amendment as-applied would only be invalidated as it pertains to that specific litigant asserting the law violates their First Amendment rights.

In a recent U.S. Supreme Court Case, Americans for Prosperity Foundation v. Bonta ((2021) 141 S.Ct. 2373.), the Court held that the California Attorney General (AG) requirement that charities disclose their Schedule B to Form 990 when registering with the state facially violated the First Amendment. Schedule B requires non-profit organizations to disclose the names and addresses of donors who have contributed more than $5,000 in a particular tax year or, in certain cases, more than 2% of an organization’s total contributions and is filed with the federal government. The Court held that the standard of review to be applied in compelled disclosure situations is an exacting scrutiny standard, and wrote that under this standard there must be a “’substantial relation between the disclosure requirement and a sufficiently important governmental interest,’ and that the disclosure requirement be narrowly tailored to the interest it promotes.” (Id. at 2383-85; internal quotation marks omitted.) The court also stated that a law may be facially challenged and invalidated “as overbroad if a substantial number of its applications are unconstitutional.” (Id. at 2387.)

The Court found that preventing fraud by charities was a substantial governmental interest, stating that there was “no doubt that California has an important interest in preventing wrongdoing by charitable organizations.”(Id. at 2387.) However, the court found that the disclosure requirement was not narrowly tailored, pointing to the fact that the District Court found no concrete example of pre-investigation collection advancing the AG’s enforcement efforts. (Id. at 2386.) The Court noted that there were other methods available to the AG to collect such information, such as a subpoena or audit letter. (Ibid.) The AG argued to the Court that the disclosure requirement did not result in any widespread chilling of association rights, that the disclosures were confidential, and that there were no burdens placed on the donors because tax-exempt charities already provide their Schedule B form to the Internal Revenue Service. (Id. at 2387-88.) The Court found these arguments unpersuasive. The Court concluded that the protections of the First Amendment as it relates to freedom of association “are triggered not only by actual restrictions” on a person’s ability to join with other people to further a shared goal but also when there is a risk of a chilling effect on association. (Id. at 2389.)

A California appellate court recently applied the holding in Americans for Prosperity Foundation to a discovery request by the Public Utility Commission’s (PUC) Public Advocate’s Office (PAO) on Southern California Gas Company (SCG) related to whether the political activities of SCG are funded by SCG’s shareholders, which is permissible, or ratepayers, which is not permissible under existing law. The court held that the discovery request violated the First Amendment as applied to SCG because it infringed upon their freedom of association rights. (Southern California Gas Company v. Public Utilities Commission (2023) 87 Cal.App5th 324.) The court applied the exacting scrutiny standard as laid out under American for Prosperity Foundation and stated that a party objecting to a discovery request based on First Amendment rights has to make a prima facie showing that the enforcement of the request will result in harassment, membership withdrawal, or discouragement of new members or other consequences that objectively indicate an impact on or “chilling” of the members’ association rights. (Id. at 342-43.) If the petitioner can make the prima facie showing the burden shifts to the government to demonstrate that the disclosure serves a compelling government interest and is the least restrictive means of obtaining the requested information. (Id. at 343.) The court stated that “a governmental entity seeking discovery must show that the information sought is highly relevant to the claims or defenses in the proceeding at hand” and that the information is essential to perform its duties. (Id. at 344-45.) Here, much like in the American for Prosperity Foundation case, the information to be disclosed would remain confidential but this was found unpersuasive by the court. They noted confidentiality was irrelevant to the matter because the evidence provided by SCG “demonstrates that the disclosure to the PAO itself would chill third parties from associating with the utility.” (Id. at 344.) SCG made this demonstration by providing evidence that disclosure would have a chilling effect on the ability of SCG to engage in activities that are lawful, and submitted declarations from organizations stating that the disclosure required by PAO would dissuade them from communicating or contracting with SCG.

It is probable that the bill would survive the first part of an exacting scrutiny test and that the disclosure requirement serves a sufficiently important governmental interest. However, a court very well may find that the bill does not meet exacting scrutiny because the disclosure requirement is not narrowly tailored to the interest it promotes. The author states above that the purpose of the bill is to “provide more transparency into the CEQA litigation process” and notes that “housing projects in particular face legal challenges from interests that have ulterior motives other than the environment.” Additionally the author posits that CEQA abuses can hinder the state and local jurisdictions from meeting their housing goals and requirements, while also highlighting the pressing need of the state to build more housing. It is unclear if the bill would facially violate the First Amendment as overbroad in a substantial number of its applications. (Americans for Prosperity Foundation, supra. at 2387.) However, based on the facts of the case in Southern California Gas Company, it is very likely that an as-applied challenge to the bill’s disclosure requirements could be made by an entity or organization that can demonstrate a chilling effect on their right to freedom of association.

The disclosure of donors that contribute in excess of $5,000 toward to cost of an action does not in any way affect the underlying legal merits of the CEQA action, and it is unclear how this information is intended to promote more housing. Plaintiffs in CEQA cases are often times are environmental organizations or local neighborhood associations, there is a risk that current donors may no longer contribute to these organizations if they fear they will have to disclose not only their identity but also the identity of any pecuniary or business interest that the person or entity has related to the proposed housing development project at issue in the action, or be subject to discovery to ascertain if they have any such business or pecuniary interest. In the above two cases the information to be disclosed was to be kept confidential and that still did not alleviate the chilling effect of the disclosure in the court’s view. Under this bill the information is to be made public. Exacerbating this is the fact that individuals donating in their individual capacity have the right to limit disclosure of their personal information to an in-camera review whereas an entity or organization cannot.

California Environmental Voters and the Sierra Club write that the bill’s requirements are burdensome on nonprofits “requiring cataloging of donations and potential disclosure of people who have nothing to do with litigation, if an organization does not specifically divide up funding sources for litigation.” They further note that the disclosure requirement “serves no public purpose, [as] lawsuits under CEQA serve to enforce a public right. A party's identity does not matter, as anyone can enforce the law. The purpose of this provision is to unacceptably pressure parties, either in the courts or the eyes of the public.”

1. Other issues with the disclosure requirement in the bill

The disclosure provision in the bill may contradict the Canons of Judicial Ethics as noted by a coalition of labor organizations, who write:

Who is picking up the tab for litigation has no bearing on the merits of a case by definition; if anything, it only has the propensity to introduce an unconscious bias rather than limit them. In any case, the Code of Judicial Ethics specifically indicates that judicial opinions are meant to be limited to the merits of the case, not extrinsic information such as who is paying for litigation. Canon 3, subdivision C., of the Code of Judicial Ethics provides, inter alia, that “A judge shall diligently discharge the judge’s administrative responsibilities impartially, on the basis of merit, without bias or prejudice, free of conflict of interest, and in a manner that promotes public confidence in the integrity* of the judiciary.” (emphasis in original).

The Canons of Judicial Ethics are replete with requirements that judges not consider anything extrinsic to the merits of a case in administering justice. In some ways it is the primary preoccupation of the Canons. For example, Canon 1 begins with the admonishment that “An independent, impartial, and honorable judiciary is indispensable to justice in our society.” (emphasis in original). In turn “impartial” is defined as, “the absence of bias or prejudice in favor of, or against, particular parties or classes of parties, as well as the maintenance of an open mind in considering issues that may come before a judge.” Compelling detailed TPLF disclosures simply creates a class or type of CEQA plaintiff without adding to or elucidating the merits of the case before the judge. (footnotes omitted)

This same coalition also notes that the disclosure requirement may add significant costs and burdens to litigants in a CEQA action and the courts by “expanding the field of potential discovery to questions around funding, and dragging third parties into the discovery process” and that it “create[s] an incentive for defendants to an action to allege a failure to disclose and then a failure to seasonably update disclosures, which motions would inherently require further discovery to determine whether there are [financial] agreements that came into being or changed, or whether additional parties have agreed to contribute to litigation.” Additionally, they contend that the provisions regarding allowing the court to withhold public disclosure if it finds that the public interest in keeping that information confidential clearly outweighs the public interest in disclosure and the provision regarding in-camera review for individual donors are likely to add “complication, time, and expense to CEQA actions, not limit or eliminate them.” The coalition concludes that the “the only remaining rationale is that this disclosure requirement will intimidate plaintiffs and attorneys out of bringing claims, or keep less wealthy plaintiffs from bringing claims, even meritorious claims, under CEQA, which by no means can be construed as somehow serving any public interest whatsoever.” Lastly, the bill would allow a court to dismiss a case, regardless of its merits, if a plaintiff did not comply with a disclosure request under the bill.

1. Other provisions in the bill

The bill also prohibits an action or proceeding from being brought to challenge the approval of a housing project included in a master environmental impact report or other plan or project already approved following the completion of an environmental review conducted pursuant to CEQA, including the resolution of any action or proceeding brought against that prior master environmental impact report or environmental review. This provision does not affect the obligations of a housing project included in a previously approved master environmental impact report, or other plan or project, to comply with the requirements of CEQA for completing further environmental reviews, including complying with all applicable public notice and comment requirements associated with that environmental review. The bill specifies that further environmental reviews relating to the housing project are subject to an action or proceeding to attack, review, set aside, void, or annul any act or decision of a public agency on the grounds of noncompliance with CEQA.

The Center for Biological Diversity and the Western Center on Law & Poverty are opposed to the bill and write that they appreciate the amendments taken in the Senate Environmental Quality Committee on these provisions but believe it “is still vague and has the potential to engender litigation over whether a certain housing project mentioned or included in a general plan or sustainable communities strategy/regional transportation plan is “included” in such a way that it cannot face a separate challenge under CEQA. The bill thus still has the potential to limit or completely eliminate judicial review for project-level EIRs for many housing projects.”

1. Amendments

These amendments do not remove the potential constitutional infirmity of the bill in regards to an as applied challenge under the First Amendment. As the Court stated in American for Prosperity Foundation (supra. at 2388) it is the requirement of disclosure itself that creates the potential chilling effect that impermissibly infringes on the freedom of association.

The amendments:

• Require the information to be disclosed upon a motion of the defendant, not as an affidavit at the time the plaintiff files the action.
• Raise the amount of a contribution to $10,000 or more.
• Provide a 30 day period where the information disclosed by the plaintiff is confidential and not disclosable.
• Provide that the information disclosed by a plaintiff or petitioner upon a motion by a defendant is not admissible into evidence for any purpose; and
• Makes conforming changes.

A mock-up of the amendments is incorporated at the end of the analysis.^[3]

1. Statements in support

The California Apartment Association writes in support stating:

Unfortunately, CEQA has been abused by individuals and organizations as a way to stop development. While CEQA’s original intent was to prevent harm to the environment, the law is often used by special interest groups to accomplish objectives that are not related to environmental protection. In a time when California so desperately needs new housing, your bill will help to shed light on lawsuits that are filed and paid for by anonymous individuals who hide behind plaintiffs so that their names and true intentions are not revealed. These lawsuits have added to the cost of housing production in California.

A Community of Friends (ACOF), a nonprofit organization based in Los Angeles with the specific mission of ending homelessness through the provision of permanent supportive housing for people affected by mental illness, writes in support stating:

Although we have had challenges developing our 50 apartment communities in the past 30+ years, we had never been involved in litigation until 2017, when we were sued in two different cities by community members opposed to our affordable housing developments. In one case, it was clear who was behind the litigation. We had opportunities to engage with the petitioner during the litigation period, and ultimately reached a settlement agreement that brought the conflict to an end.

In the second case we did not know who the petitioner(s) were. Under the guise of “Citizens for an Equitable Redlands,” the petitioners through their attorney refused to meet. There was no opportunity to “face your opponent” and see if we could address concerns amicably. While ACOF ultimately won in court, the delay caused by the litigation resulted in the loss of federal rental subsidies awarded to the project pursuant to a competitive process as well as Federal Home Loan Bank funds, and subjected ACOF and the project to additional costs.

1. Statements in opposition

The Center for Biological Diversity and Western Center on Law & Poverty write in opposition stating:

Even under the most liberal reading, SB 393 still imposes onerous reporting requirements on conservation and community groups and opens the door for counsel for project proponents (which are often large law firms with substantial resources) to embark on intrusive and extremely costly discovery (depositions, demands for documents, interrogatories, etc.) against conservation and community groups to assess whether they have properly made the disclosures required by SB 393. Such discovery campaigns are not only costly and interfere with the ability of groups to further their mission; they also would have the effect of prolonging CEQA litigation and delaying resolution of cases, in violation of CEQA’s goal of prompt resolution of any judicial review. […]

SB 393 appears to impermissibly require the disclosure of information that may be protected by a membership organization’s First Amendment associational rights. […] Here, SB 393 describes no government interest supporting compelled disclosure of protected activities under the First Amendment, nor can it. Far from leading to the quick resolution of CEQA cases, SB 393 will engender years of costly litigation over its constitutionality, which will likely end with the statute being held unconstitutional. […]

SB 393 is a misguided bill that furthers the narrative that CEQA is a significant barrier to new housing in the state. However, research demonstrates that CEQA is not a major barrier to development and instead helps protect the health and safety of communities.^[4] CEQA results in the improvement of development proposals, inclusion of mitigation measures, and reduction of pollution and other harms to communities. For vulnerable communities, CEQA is often the only tool available to provide input on the environmental and public health impacts of development proposals and ensure consideration of alternatives and mitigation measures to limit harm.

SUPPORT

A Community of Friends

California Apartment Association

California Association of Realtors

California Builders Alliance

California Building Industry Association

California Housing Consortium

California YIMBY

City of San Jose

Civil Justice Association of California

Eden Housing

Family Business Association of California

Sacramento Regional Builders Exchange

Southern California Association of Governments

OPPOSITION

California Environmental Voters

California Labor Federation, AFL-CIO

Center for Biological Diversity

Mission Street Neighbors

Natural Resources Defense Council

New Livable California

SEIU California

Sierra Club California

State Building & Construction Trades Council of California

Teamsters Public Affairs Council

United Food and Commercial Workers, Western States Council

Western Center on Law & Poverty

RELATED LEGISLATION

Pending Legislation: SB 794 (Niello, 2023) requires anyone challenging a project under CEQA to file an affidavit with the court identifying anyone who has contributed $100 or more – in financial or in-kind support – to support the effort. The bill also requires CEQA challenges to certain commercial, housing, or public works projects where a minimum of $25 million has been invested to be resolved by the court in 365 days or fewer. SB 794 failed passage in the Senate Environmental Quality Committee, but was granted reconsideration.

Prior Legislation:

AB 3051 (Diep, 2020) would have required a plaintiff or petitioner in a CEQA action to disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was never heard in the Assembly Natural Resources Committee.

AB 3054 (Salas, 2020) would have required a plaintiff or petitioner in a CEQA action to disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was never heard in the Assembly Natural Resources Committee.

AB 1673 (Salas, 2019) would have required a plaintiff or petitioner in a CEQA action to disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill failed passage in the Assembly Natural Resources Committee.

SB 1341 (Glazer, 2018) would have required a plaintiff or petitioner in a CEQA action to disclose the identity of a person or entity that contributes in excess of $1,000, toward the plaintiff’s or petitioner’s costs of the action. The bill also would have prohibited an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects on grounds of noncompliance with CEQA. This bill was never set for a hearing in the Senate Environmental Quality Committee.

SB 1248 (Moorlach, 2016) would have required a plaintiff or petitioner in a CEQA action to disclose the identity of a person or entity that contributes in excess of $100 toward the plaintiff’s or petitioner’s costs of the action. This bill was defeated in the Senate Environmental Quality Committee.

AB 2026 (Hadley, 2016) would have required a plaintiff or petitioner in a CEQA action to disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was defeated in the Assembly Natural Resources Committee.

PRIOR VOTES:

Senate Environmental Quality Committee (Ayes 6, Noes 0)

**************

Mock-Up of Proposed Amendments

SECTION 1. Section 21176 is added to the Public Resources Code, to read:

21176. (a) In (1) Any defendant in an action or proceeding to attack, review, set aside, void, or annul any act or decision of a public agency relating to a housing development project, as defined in subdivision (h) of Section 65589.5 of the Government Code, on the grounds of noncompliance with this division, division may file a motion requesting the plaintiff or petitioner to identify the plaintiff or petitioner shall include an affidavit identifying every person or entity who made a monetary contribution of five ten thousand dollars ($5,000) ($10,000) or more, or committed to contribute five ten thousand dollars ($5,000) ($10,000) or more, for the preparation of the petition and subsequent action or proceeding.

(2) Upon a motion by the defendant pursuant to paragraph (1), a plaintiff or petitioner shall provide the information specified under this section within seven days.

(3) Any information disclosed to the defendant by the plaintiff or the petitioner pursuant to this section shall be keep confidential and not disclosed to anyone for 30 days.

(4) A plaintiff or petitioner may request the court’s permission to withhold the public disclosure of a person or entity who made a monetary contribution. The court may grant the request if it finds that the public interest in keeping that information confidential clearly outweighs the public interest in disclosure. If the court grants a request under this paragraph, the information disclosed to the defendant shall be kept confidential.

(b) The If the defendant makes a motion pursuant to subdivision (a), the plaintiff or petitioner shall have a continuing obligation throughout the course of the proceeding to identify any person or entity that has made a single or multiple contributions or commitments, the sum of which is five ten thousand dollars ($5,000) ($10,000) or more, and that were intended to fund the action or proceeding within seven days of receiving the contribution. All other provisions of this section shall apply to a disclosure under this subdivision.

(c) In complying with subdivisions (a) and (b), the plaintiff or petitioner shall use reasonable efforts to identify the actual persons or entities that are the true source of the contributions.

(d) The disclosures required pursuant to subdivisions (a) and (b) shall include the exact total amount contributed and also include the identity of any pecuniary or business interest that the person or entity has related to the proposed housing development project.

(e) A plaintiff or petitioner may request the court’s permission to withhold the public disclosure of a contributor. The court may grant the request if it finds that the public interest in keeping that information confidential clearly outweighs the public interest in disclosure.

(e) The information disclosed by a plaintiff or petitioner upon a motion by a defendant pursuant to this section shall not be admissible into evidence for any purpose.

(f) A court may, upon its own motion or the motion of any party, take any action necessary to compel compliance with the requirements of this section, up to and including dismissal of the action or proceeding.

(g) An individual contributing funds to file an action or proceeding pursuant to this division in that individual’s individual capacity, and not as a representative for an organization or association, has the right to limit disclosure of that individual’s personal information to an in-camera review by the court.

(h) The information disclosed pursuant to this section may be used to enable a court to determine whether the financial burden of private enforcement supports the award of attorneys’ fees in actions or proceedings brought to enforce this division.

SEC. 2. Section 21176.5 is added to the Public Resources Code, to read:

21176.5. (a) An action or proceeding shall not be brought pursuant to Section 21167 challenging the approval of a housing project included in a master environmental impact report, pursuant to Article 2 (commencing with Section 21157) of Chapter 4.5, or other plan or project already approved following the completion of an environmental review conducted pursuant to this division, including the resolution of any action or proceeding brought against that prior master environmental impact report or environmental review.

(b) This section does not affect the obligations of a housing project included in a previously approved master environmental impact report, or other plan or project, to comply with the requirements pursuant to this division for completing further environmental reviews, including complying with all applicable public notice and comment requirements associated with that environmental review.

(c) Further environmental reviews relating to the housing project are subject to an action or proceeding to attack, review, set aside, void, or annul any act or decision of a public agency on the grounds of noncompliance with this division, pursuant to Section 21167.

1. All further references are to the Public Resources Code unless otherwise indicated. ↑

2. Sen. Environmental Quality Comm. analysis of SB 393 (2023-24 reg. session) as introduced Feb. 9, 2023 at p. 3-4. ↑

3. The amendments may also include technical, nonsubstantive changes recommended by the Office of Legislative Counsel. ↑

4. See California’s Living Environmental Law: CEQA’s Role in Housing, Environmental Justice, & Climate

   Change (2021); available at

   https://rosefdn.org/wp-content/uploads/CEQA-California_s-Living-Environmental-Law-10-25-21.pdf. ↑

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2023 - 2024 Regular

Bill No: SB 393

SUBJECT: California Environmental Quality Act (CEQA): judicial challenge: identification of contributors: housing projects.

DIGEST: This bill requires a CEQA plaintiff to disclose any contributions he or she has received of $1,000 or more to help fund the legal action. It also prevents a CEQA action from being filed against a housing project that was included as part of a larger plan or project already approved under CEQA.

ANALYSIS:

Existing law:

1. CEQA requires lead agencies with the principal responsibility for carrying out or approving a project to prepare a negative declaration (ND), mitigated negative declaration (MND), or environmental impact report (EIR) for the project, unless the project is exempt from CEQA. (Public Resources Code (PRC) §21000 et seq.). If a project may have a significant effect on the environment, the lead agency must prepare a draft EIR. (CEQA Guidelines §15064(a)(1), (f)(1))
2. Establishes various timelines under which a person has a right to bring an action under CEQA. (PRC §21167)
3. Allows an agency to prepare a master EIR for certain projects, including when a project consists of “smaller projects that will be carried out in phases.” (PRC §21157 et seq.)
4. States that when a master EIR has been prepared and certified, it may allow for a limited agency review of subsequent projects that were described in the report (PRC §21157.1), though a master EIR cannot be used if it was certified more than five years before an application is filed or the subsequent project (PRC §21157.7)
5. Defines a “housing development project” to mean a use consisting of any of the following:
   1. Residential units only.
   2. Mixed-use developments consisting of residential and non-residential uses with at least two-thirds of the square footage designated for residential use.
   3. Transitional housing or supportive housing. (Government Code §65589.5(h)(2)

This bill:

1. Requires a plaintiff or petitioner bringing a CEQA action to include an affidavit that discloses the identity of any person or entity contributing $1,000 or more toward the plaintiff’s or petitioner’s costs of the action.
2. States the plaintiff or petitioner has a “continuing obligation” throughout the proceeding to identify any person or entity that has made a single or multiple contributions or commitments that add up to $1,000 or more that are intended to fund the action or proceeding.
3. Requires the plaintiff or petitioner to identify any pecuniary or business interest related to the project of any person or entity that contributes $1,000 or more to the costs of the action.
4. Allows a plaintiff or petitioner to ask the court to withhold the public disclosure of a contributor and the court can grant the request if it finds the public interest in keeping that information confidential clearly outweighs the public interest in disclosure.
5. Allows a court to take any action necessary to compel compliance with this section, including dismissing the action or proceeding.
6. Allows a person who contributes funds to file an action in their individual capacity, and not as a representative for an organization or association, to limit disclosure of their personal information to an in-camera review by the court.
7. States any information disclosed pursuant to the bill may be used by the court to determine if the financial burden of private enforcement supports the award of attorneys’ fees in actions or proceedings brought to enforce CEQA.
8. Prevents a CEQA action from being filed against a housing project that was included as part of a plan or project already approved following the completion of an environmental review conducted under CEQA, including the resolution of any action brought against that prior environmental review.
9. Makes it clear that regardless of the provision in (8), a housing project still must comply with obligations included in a previously approved plan or project to meet the requirements under CEQA.

Background

1. The A, B, C’s of CEQA. CEQA was enacted by the Legislature and signed into law by Governor Ronald Reagan in 1970. While it has evolved into a very complex Act over the past 53 years, at its core the basic principles of CEQA are relatively simple.

It is designed to (a) make government agencies and the public aware of the environmental impacts of a proposed project, (b) ensure the public can take part in the review process, and (c) identify and implement measures to mitigate or eliminate any negative impact the project may have on the environment.

CEQA is self-executing statute enforced by civil lawsuits that can challenge any project’s environmental review. Public agencies, as well as private individuals and organizations, can file lawsuits under CEQA.

1. Save Livermore Downtown v. City of Livermore. Back in 2004, Livermore adopted a general plan and a downtown specific plan for which it completed and certified an EIR. A subsequent EIR (SEIR) was certified in 2009, after the city amended its downtown specific plan to increase the amount of development allowed. Fast-forward to January 2018, when the city approved a plan for redeveloping city-owned sites in its downtown core to have a public park, commercial retail buildings, cultural facilities, multi-family workforce housing, a public parking garage, and a hotel. In May 2018, Eden Housing, a private developer, was selected to build 130 units of affordable housing as a part of that downtown core and an addendum to the 2009 SEIR was prepared in 2019, followed by two further addenda in 2020 when the project was modified.

The city approved the project in May 2021, finding it was both consistent with the SEIR that had been certified and was an infill development project.

A group opposing the project, Save Livermore Downtown (SLD), filed suit under CEQA in June 2021, alleging the city’s environmental study for the project was inadequate and not in compliance with the city’s downtown specific plan. According to news reports, SLD has spent over $1 million on mailers and advertising in opposition to the affordable housing project.

In February 2022, the Alameda County Superior Court rejected the lawsuit, stating in part the lawsuit was “almost utterly without merit.” While the city and Eden Housing won at the trial court level, Eden Housing stated at the time the delay had forced it to return $68 million in low-income housing tax credits.

SLD appealed the decision, but in December 2022, a three justice panel at the California 1^st District Court of Appeal voted unanimously to uphold the Alameda County Superior Court decision. The court found the project was indeed exempt from CEQA review and had met all of the tests in statute to qualify for the exemption. In its ruling upholding the trial court decision, the appeals court wrote:

“With the trial court we conclude, ‘[t]his is not a close case.’ SLD’s contentions regarding the project’s consistency with the Downtown Specific Plan and its CEQA arguments lack merit, so much so that the inherent weakness of these claims further supports the trial court’s finding that SLD brought this action to delay the project.”

On January 12, 2023, SLD filed a request to have the justices rehear their arguments and is awaiting a decision.

Simultaneously, a separate group – Move Eden Housing (MEH), which, according to the court, shares “a common promoter … and common litigation counsel” with SLD – collected signatures on a referendum in an attempt to force the city’s decision to build the affordable housing project to go before the voters. That referendum was submitted to the city in July 2022 and rejected by the city. MEH filed a lawsuit over that decision in August 2022.

On January 19, 2023, an Alameda County Superior Court judge rejected MEH’s argument, ruling the Livermore City Clerk acted within the law when she declined to process MEH signatures seeking the citywide vote. The judge noted the city council’s approval to sell land for the project to Eden was an administrative act — not a legislative act — and therefore not eligible for a public vote.

MEH is considering appealing that decision as well.

1. CEQA Litigation. Current law requires every party filing a CEQA lawsuit to report to the Attorney General. According to a 2021 report compiled by The Housing Workshop, the number of CEQA lawsuits filed each year averaged 195 between 2002 and 2019 – with a high of 247 in 2008 and a low of 118 in 2005 (according to the Attorney General, 192 CEQA lawsuits were filed in 2020 and 211 were filed in 2021). The same report found the rate of litigation for challenges to projects alleging noncompliance with CEQA is low, with lawsuits filed for 2 out of every 100 projects. The estimated rate of litigation for all CEQA projects requiring an EIR, a MND, or an ND was 2% for the seven-year period from 2013 to 2019.

Comments

1. Purpose of Bill. According to the author, “Under the California Environmental Quality Act (CEQA), individuals and entities can file lawsuits anonymously and without disclosing their donors’ identities or interests. As a result, many housing projects in particular face legal challenges from interests that have ulterior motives other than the environment. Unfortunately, an affordable housing project located in my district has been one of the latest victims of this abuse.

“According to the California Department of Housing and Community Development (HCD), the state must build over 2.5 million homes over the next eight-year cycle. No less than one million of those homes must be affordable to lower-income households. CEQA abuses can hinder the state from meeting its housing goals and local jurisdictions from meeting their Regional Needs Housing Assessment (RHNA) numbers. In order to provide more transparency into the CEQA litigation process, this bill would require plaintiffs or petitioners to disclose the identities of any donor who donates $1,000 or more towards the case. This will provide the court and the public with a better understanding of who is contributing to these efforts that, in many cases, deprive California residents from needed housing.”

1. Section One – Contributions. Section 1 of the bill requires a plaintiff or petitioner bringing a CEQA action to include an affidavit that discloses the identity of any person or entity contributing $1,000 or more supporting the action. This is somewhat analogous to the reporting mandated regarding campaign contributions, which is governed by the Political Reform Act (PRA) and the Fair Political Practices Commission (FPPC). Given that the PRA and rules adopted by the FPPC would not apply to this bill, several questions arise:
   1. Timing. The bill makes it clear that when the initial CEQA challenge is filed, the plaintiff or petitioner must include an affidavit containing the names of people and entities that contributed $1,000 or more. It also says the plaintiff or petitioner has a “continuing obligation” to report any further contributions that are $1,000 or more – or push a person’s total contribution over that threshold. However, the bill isn’t clear when a plaintiff or petitioner is supposed to report those subsequent contributions to the court. Is it within 24 hours of receiving them – like the law that applies to campaign contributions of $1,000 or more made within 90 days of an election – or some other timeframe? The author and committee may wish to consider clarifying how much time a plaintiff or petitioner has to report contributions.
   2. Reporting Exact Amounts & Increases – Or Just Over $1,000? The bill requires the reporting of contributions of $1,000 or more, but it doesn’t clearly require the exact amount of the contribution to be reported. The author and committee may wish to consider whether the exact amounts of the contributions should be disclosed.

Similarly, if, for example a person contributes $1,000 to support the CEQA lawsuit, they are reported to the court. However, if they subsequently make additional contributions toward the suit, it doesn’t appear the plaintiff or petitioner is required to disclose those additional contributions. The author and committee may wish to consider whether those additional contributions should be disclosed so the court and the public have a clear picture of how much in total a particular person or entity has contributed.

Under California election law and regulations adopted by FPPC, the cumulative totals of contributions to candidates for certain offices must be reported when the total exceeds $1,000.

• 1. Splitting & Laundering Contributions. Under the bill, there are ways a person or entity could avoid having to be reported by the plaintiff or petitioner as having made a $1,000 – or more – contribution in support of a CEQA suit. For example, a married couple could split a $1,800 contribution by giving $900 in each of their names and neither of them would have to be reported.

Similarly, an entity could take $9,999, split it between 10 people, have them all make $999 contributions, and nothing would have to be reported.

As such, the author and committee may wish to consider if the ability to split contributions in such a fashion undermines the intent of the bill and if so, whether and how the bill could be altered to preclude it.

California election law and regulations adopted by the FPPC try to prevent this problem by requiring the “true source” of each contribution to be reported.

1. Effect On The Courts. As noted in the “Background” section, an average of 195 CEQA lawsuits have been filed each year since 2002, accounting for about 2% of the total civil suits filed in court. Those numbers likely grow if one were to count appeals as their own separate cases.

How the requirement imposed by this bill for plaintiffs or petitioners bringing a CEQA action to include an affidavit disclosing the identity of any person or entity contributing $1,000 or more toward the plaintiff’s or petitioner’s costs of the action will affect the workload of the courts is uncertain.

Given this lack of certainty, the author and committee may wish to consider moderating the impact on the courts by limiting the disclosure to CEQA cases involving housing development projects as defined in GOV 65589.5 and raising the disclosure threshold to $5,000. This amount mirrors the contribution figure candidates for statewide office and primarily formed ballot measure committees must report to the Secretary of State under California election law, as well as certain entities supporting or opposing the qualification of a local ballot measure.

1. Equitable Disclosure. There are two separate equity issues worthy of note.

First, the bill only requires plaintiffs, but not respondents or real parties in interest, to disclose when they accept contributions of $1,000 or more in support of their position in a CEQA lawsuit.

Second, while the disclosure of large contributions is important, there is no requirement to report an entity’s overall spending on a lawsuit. So, while Plaintiff A who accepts three $1,000 contributions in support of their lawsuit would have to report those to the court, the court and the public would have no idea how much Plaintiff A raised and spent overall to support their lawsuit. Plaintiff B, who may raise money in amounts less than $1,000 contributions, could actually raise more funds overall, but would never have to report anything to the court. Similarly, Plaintiff C who may not accept any contributions and may entirely self-finance a CEQA lawsuit also wouldn’t have to report anything to the court.

As a result, the snapshot of money raised in support of a CEQA lawsuit would be incomplete, at best.

1. Section Two – Precluding Challenges Under CEQA Against Projects Approved As Part Of A Larger Plan Or Project. Generally on large or multi-phase projects, the proponent will complete a master EIR, which is designed to streamline the environmental review process of a project that may involve multiple pieces or phases. This allows the lead agency to conduct all of the environmental reviews up front and limits further reviews as each piece or phase is constructed.

For example, a master EIR could be used for a two-phase commercial and housing development. The master EIR would look at the environmental impacts of the two phases individually and collectively, and if it determined there were impacts in need of mitigation, those would be detailed and completed. If the commercial portion was developed first and the housing portion were developed two years later, the lead agency – two years later – would simply look to ensure nothing had changed from the assessment done in the master EIR prior to the project being built. If something had changed – perhaps the air pollution impact had been underestimated or now the housing development wanted to build more units – then those incremental impacts and changes would have to be addressed and, if appropriate, mitigated.

The use of a master EIR, however, does not preclude anyone from bringing an action against either the initial project or the sub-projects it contains.

SB 393 effectively states that once a master EIR has been certified and all actions against it have been disposed of, then – in cases where the master EIR involves a housing project – no subsequent actions can be filed against a sub-project that was approved as part of the original master EIR.

The section does require a housing project to complete “further environmental study, including complying with all applicable public notice and comment requirements associated with that environmental review.”

However, it is not clear this language will ensure that if the housing project is not consistent with the master EIR, if there were changes in circumstances, or if the master EIR is no longer valid, that a further project-specific EIR, ND, or MND must be completed as part of CEQA and is subject to challenge. The author and committee may wish to consider whether this provision should be clarified to ensure projects in need of further environmental review receive that review, and that subsequent review is subject to challenge under CEQA.

1. Committee amendments. Staff recommends the committee adopt the suggested amendments in Comments 3 and 5 above.

DOUBLE REFERRAL:

If this measure is approved by the Senate Environmental Quality Committee, the do pass motion must include the action to re-refer the bill to the Senate Judiciary Committee.

Related/Prior Legislation

SB 794 (Niello) of 2023 requires anyone challenging a project under CEQA to file an affidavit with the court identifying anyone who has contributing $100 or more – in financial or in-kind support – to support the effort. The bill also requires CEQA challenges to certain commercial, housing, or public works projects where a minimum of $25 million has been invested to be resolved by the court in 365 days or fewer. SB 794 is pending in the Senate Environmental Quality Committee.

AB 2026 (Hadley) of 2016 sought to require a plaintiff or petitioner to, in a CEQA action, disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was defeated in the Assembly Natural Resources Committee.

SB 1248 (Moorlach) of 2016 sought to require a plaintiff or petitioner to, in a CEQA action, disclose the identity of a person or entity that contributes in excess of $100 toward the plaintiff’s or petitioner’s costs of the action. This bill was defeated in the Senate Environmental Quality Committee.

SB 1341 (Glazer) of 2018 sought to require a plaintiff or petitioner, in a CEQA action, to disclose the identity of a person or entity that contributes in excess of $1,000, toward the plaintiff’s or petitioner’s costs of the action. It also sought to prohibit an action or proceeding from being brought in the court to attack, review, set aside, void, or annul an act of a public agency for housing projects on grounds of noncompliance with CEQA. This bill was assigned to the Senate Environmental Quality Committee but was never heard.

AB 1673 (Salas) of 2019 sought to require a plaintiff or petitioner to, in a CEQA action, disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was defeated in the Assembly Natural Resources Committee.

AB 3054 (Salas) of 2020 sought to require a plaintiff or petitioner to, in a CEQA action, disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was never heard in the Assembly Natural Resources Committee.

AB 3051 (Diep) of 2020 sought to require a plaintiff or petitioner to, in a CEQA action, disclose the identity of a person or entity that contributes in excess of $1,000 toward the plaintiff’s or petitioner’s costs of the action. This bill was never heard in the Assembly Natural Resources Committee.

SOURCE:

Author

SUPPORT:

A Community of Friends

California Apartment Association

California Building Industry Association

Eden Housing

Housing Contractors of California

OPPOSITION:

California Environmental Voters (formerly CLCV)

Center for Biological Diversity

New Livable California Dba Livable California

SEIU California

Sierra Club California

State Building and Construction Trades Council of Ca

Teamsters Public Affairs Council

United Food and Commercial Workers, Western States Council

ARGUMENTS IN SUPPORT:

The California Building Industry Association (CBIA) writes in support:

“SB 393 is an important measure that would require plaintiffs or petitioners to disclose donors who contribute $1,000 or more towards a California Environmental Quality Act (CEQA) lawsuit. This will bring more transparency to the CEQA process that often stalls and prohibits needed housing projects from moving forward.

“In addition, this bill would prohibit additional litigation of a housing project that has already been litigated under CEQA and has completed its environmental review process. This would prevent repetitive litigation against projects and further development delays. This conforms to existing law that requires CEQA lawsuits to be filed within 30 days of a local government issuing a notice that it intends to approve a housing project for development.”

ARGUMENTS IN OPPOSITION:

The United Food and Commercial Workers Western States Council (UFCW) writes in opposition:

“The Bill as proposed does not serve any identifiable public purpose. It would impose unnecessary burdens on plaintiffs, decrease judicial efficiency by adding a motion practice and discovery tool that would complicate litigation, and would likely exclude meritorious cases from court, and in particular meritorious cases being brought by plaintiffs with fewer resources with which to litigate–and therefore excluding those most disproportionately impacted by environmentally deleterious development from the courthouse, when it is precisely they who are

most in need of protection by CEQA. For these reasons we urge the Committee to reject this Bill or significantly amend it to the narrow issue where some public policy may possibly be served.

“We are not insensible of the existence of problems with how CEQA is litigated–by plaintiffs as well as defendants–and how it is implemented by local agencies. That some reforms are necessary is not the question before the Committee. The question is whether the proposed Bill actually addresses any of the challenges facing the CEQA system, whether it improves judicial efficiency, better gets to the merits of cases, or excluded non-meritorious claims. CEQA cases will both become less efficient, with further burdens of discovery (and “discovery on discovery”), while at the same time potentially keeping lower-income plaintiffs and meritorious cases out of court. That does not serve justice or public policy.”

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