UPDATE: Supreme Court Relaxes Standing Requirement For Corporations In CEQA Cases But Finds No EIR Is Required For Ordinance That Bans Use Of Plastic Shopping Bags

July 21, 2011 | Bulletin No. 976537.1

In Save the Plastic Bag Coalition v. City of Manhattan Beach, (--- P.3d ----, Cal., July 14, 2011), the California Supreme Court considered (1) whether corporations are subject to a different standing requirement when challenging determinations regarding the necessity of preparing an environmental impact report (“EIR”); and (2) whether a city was “required to prepare an EIR on the effects of an ordinance banning the use of plastic bags by local businesses.” The Supreme Court held that a corporation is not subject to heightened scrutiny when it files a citizen suit to challenge a determination regarding the preparation of an EIR. The Court further held that the city was not required to prepare an EIR because “[s]ubstantial evidence and common sense support the city’s determination that its ordinance would have no significant environmental effect.”

Note

This Legal Alert updates our previous Legal Alert on this case entitled, “Environmental Impact Report Was Required For City Ordinance Which Prohibited Distribution Of Plastic Bags To Customers At The Point Of Sale,” February 18, 2010.

h3>Facts

The city manager of the City of Manhattan Beach issued a staff report recommending that the city adopt an ordinance which bans the use of "point-of-sale plastic carry-out bags." The proposed ordinance contained a statement that the California Environmental Quality Act ("CEQA") "did not apply because the ban would have no significant effect on the environment . . . and because it qualified as a regulatory program to protect the environment." The Save the Plastic Bag Coalition ("Coalition"), a group of companies that claim the ban will affect them, objected to the proposed ordinance and notified the city that it would bring a lawsuit if the city passed the ordinance "without a full CEQA review."

An initial study of the proposed ban "concluded that any increase in the use of paper bags in Manhattan Beach would be relatively small, with minimal impacts on energy use, air quality, [and] vehicle traffic" and "that the ordinance posed no environmental threat to fish, wildlife, plant communities, historical resources, or human beings." The study recommended that the city adopt "a negative declaration finding that the ordinance could not have a significant effect on the environment."

The City Council adopted Ordinance No. 2115 which provides the following: "No Affected Retail Establishment, Restaurant, Vendor or Non-Profit Vendor shall provide Plastic Carry-Out Bags to customers at the point of sale. Reusable Bags and Recyclable Paper Bags are allowed alternatives." The ordinance states it will not have any significant impacts on the environment and adopts a negative declaration for the ban.

The Coalition petitioned for a writ of mandate seeking to bar the city from enforcing the ordinance until the city prepared an EIR. The trial court found an EIR was required and that the Coalition had standing to challenge the city's determination that no EIR was required. A court of appeal affirmed the decision of the trial court.

Supreme Court Decision

The Coalition claimed public interest standing to pursue the CEQA claim. The trial court held that the Coalition “asserted only a commercial and competitive interest” and its alleged “injury was not within the ‘zone of interests’ protected by CEQA, and thus was too indirect to establish the requisite beneficial interest.” The trial court relied on the case of Waste Management of Alameda County, Inc. v. County of Alameda (2000) 79 Cal.App.4th 1223, 1238, to reach its conclusion. In Waste Management, a court of appeal held “corporations are subject to heightened scrutiny when they file citizen suits.”

The Supreme Court held that the Coalition had standing to seek a writ of mandate. The Supreme Court expressly disapproved of Waste Management’s holding that a corporation is subject to heightened scrutiny before it may qualify for public interest standing. The Court stated, “The term ‘citizen’ in this context is descriptive, not prescriptive” because “[i]t reflects an understanding that the action is undertaken to further the public interest and is not limited to the plaintiff’s private concerns.” Unless there is a compelling reason to find otherwise, “corporate entities should be as free as a natural person to litigate in the public interest.” Here, the court found the Coalition’s CEQA cause of action as appropriate for a citizen suit.

However, the Court found no EIR was required for the ban on plastic bags. A public agency is not required to “prepare an EIR unless the project may result in a ‘significant effect on the environment.’” If the study of a project reveals “substantial evidence supporting a fair argument the project may have significant adverse effects, the agency must (assuming the project is not exempt from CEQA) prepare an EIR.” However, where “‘[t]here is no substantial evidence, in light of the whole record . . . that the project may have a significant effect on the environment,’ the agency may adopt a negative declaration.”

The city admitted there is no dispute “that the manufacture, transportation, recycling, and landfill disposal of paper bags entails more negative environmental consequences than do the same aspects of the plastic bag ‘life cycle.’” However, when the Court considered “the actual scale of the environmental impacts that might follow from increased paper bag use in Manhattan Beach, instead of comparing the global impacts of paper and plastic bags” the Court concluded “it is plain the city acted within its discretion when it determined that its ban on plastic bags would have no significant effect on the environment.” The Court found, “The city properly anticipated that there would be no increase from those establishments already using paper bags, that some consumers would switch from plastic to reusable bags, that some would recycle their paper bags, and that the number of Manhattan Beach consumers is small enough that the increase in the regional solid waste stream caused by discarded paper bags would be insignificant.” Although there may be some impacts felt beyond Manhattan Beach, an agency is not “required to conduct an exhaustive analysis of all conceivable impacts a project may have in areas outside its geographical boundaries.” Because the city’s population is under 40,000 and it does not have a large number of retail establishments, “the increase in paper bag production following a local change from plastic to paper bags can only be described as insubstantial.”

The Supreme Court reversed the decision of the court of appeal. It stated, “Here, common sense leads us to the conclusion that the environmental impacts discernible from the “life cycles” of plastic and paper bags are not significantly implicated by a plastic bag ban in Manhattan Beach.” However, even the city conceded that this analysis may not apply to a ban by a larger governmental entity.

Questions

If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Jeffrey L. Massey, Eric N. Robinson or Daniel J. O'Hanlon | 916.321.4500