CEQA COMPLIANCE, PART TWO: MINIMIZING COSTS AND LITIGATION RISKS
May 20, 2019
By Andrew Kingsdale, Esq.
As we recently detailed, Governor Newsom’s Trailer Bill would amend California’s cannabis statutes in significant ways, such as extending provisional licensing beyond January 1, 2020. The Trailer Bill also would extend another key deadline discussed in our last CEQA blog post: the July 1, 2019 cutoff to a CEQA exemption for cities and counties.
Under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), until July 1, 2019, California’s hallmark environmental protection law, the California Environmental Quality Act (CEQA), “does not apply to the adoption of an ordinance, rule, or regulation by a local jurisdiction that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity.” (Business and Professions Code § 26055(h).) The Governor’s Trailer Bill would extend this exemption until July 1, 2021.
This CEQA exemption for cities and counties encourages California’s localities to enact commercial cannabis permitting ordinances. Yet, with only about one-third of these jurisdictions presently allowing any commercial cannabis businesses, and tax revenues falling short of goals, it appears that further encouragement is needed. Hence, the proposed Trailer Bill and its two-year extension.
Nevertheless, while this exemption may reduce CEQA barriers to regulatory entry for local governments, it does not offer much relief to cannabis businesses themselves. Indeed, by its own terms, for local governments to be exempt, their individual permitting decisions must require “discretionary review.” A locality’s “discretion” to issue or deny a permit is part of what brings its permit approval under CEQA’s purview. (CEQA Guideline §§15352, 15357)
In other words, if you are applying for a commercial cannabis permit, you still need to make sure your business plans meet CEQA’s requirements.
In this post, we will focus on project-level CEQA compliance and offers some ideas for clearing this hurdle while aiming to minimize the cost and burden.
1. Understand Your Local Jurisdiction’s CEQA Approach
As “lead agencies” for CEQA purposes, cities and counties assume primary responsibility for approving or denying individual permit applications based on CEQA’s requirements. Therefore each business should work closely with its local jurisdictions to understand its assessment of “significant” impacts.
California’s cities and counties have reached widely different conclusions about the likelihood and severity of commercial cannabis environmental impacts of within their borders. Some have bypassed any analysis, taking advantage of the aforementioned MAUCRSA exemption; others have conducted in-depth environmental impact reviews. Permit applicants should understand where their jurisdiction falls on this spectrum, and which impacts (if any) are important to their jurisdiction.
This information is especially crucial for project management purposes because expert studies about certain CEQA impact factors (e.g. cultural or biological resources) can take longer than others to schedule and complete.
Additionally, an applicant may be able to “tier” off its jurisdiction’s prior analyses, especially if the jurisdiction already has completed an EIR (environmental impact report) reaching conclusions about particular environmental impacts related to the applicant’s project.
So start local, and get focused on key impacts factors early.
2. Fit into Exemptions
If possible, tailor your permit application to fit within a project-level CEQA exemption. Fit your project into multiple exemptions if that is an option!
CEQA has a number of exemptions, mostly commonly “statutory exemptions” and “categorical exemptions.” If a project meets an exemption, then it generally will not require expensive analysis of environmental impacts because it is pre-determined not to have significant effect on the environment.
The Bureau of Cannabis Control encourages this approach. Its “CEQA Exemption Petition Form” (BCC-LIC-026 (New 10/18)) suggests certain exemptions that may commonly apply to cannabis businesses. These “common” exemption categories have two general themes: 1) projects with pre-existing facilities or pre-developed land, and 2) minor alterations to land. CEQA heavily favors project applicants who build on already-constructed or already-disturbed land. When a cannabis permit applicant is choosing a potential site for its facility, it should keep these potential exemptions in mind (along with other local land use and zoning requirements, of course).
CEQA exemptions are not foolproof, however, because they are not absolute and claims of exemption may be subject to challenge. Which leads us to the next tip . . .
3. Know (and Work With) Your Community
NIMBY (“Not In My Back Yard”) and anti-cannabis neighbors can weaponize CEQA to delay or kill a cannabis project, which is why community outreach is critically important. Inform and educate your neighbors early on to make them feel heard. Get their buy-in before breaking ground.
Is your community concerned about traffic? Odors? Noise? Pesticides? Try to find a common-ground solution (or, “mitigate potential impacts” in CEQA-speak) to avoid time-consuming and costly battles.
Even if a permit application fits within one or more categorical exemptions, “exceptions” to these exemptions can apply to require deeper study of environmental impacts. For example, long-term “cumulative impacts” of the cannabis operation might be “significant” enough to merit further study. So too with particularly sensitive environmental surroundings, or important historical or archeological areas.
So don’t just rely on CEQA exemptions; also rely on good community relations, which must be cultivated and carefully tended to from the inception of the project.
4. Talk to a CEQA Consultant Early
Develop a CEQA strategy early on, and prepare for hiccups along the way. CEQA environmental consultants can help permit applicants spot potential problem areas, evaluate the “significance” of potential environmental impacts, recommend ways to mitigate those impacts, and advise on the appropriate environmental document to prepare. This upfront legwork will build a “defensible” CEQA compliance approach–if disputes ever should arise.
Environmental analysis and impact reports can be very expensive, potentially costing a California small cultivator around $40,000 to $60,000. (“Navigating Environmental Regulations,” Marijuana Business Magazine, January 2019). But failing to do the studies can cost a lot more than that down the road if the project is held up in litigation.
CONCLUSION
CEQA is complicated, and reasonable minds can differ about how “significant” a particular environmental impact may be. This is yet another area of law where an ounce of prevention can save a ton of headache and heartache in the future.
This information is provided as a public service and is not intended as legal advice. For specific questions related to CEQA compliance or for legal advice concerning permitting, licensing and compliance in general, please contact the Law Offices of Omar Figueroa at (707) 829-0215 or info@omarfigueroa.com to schedule a confidential legal consultation.