Challenging CEQA Processing Fees

Complying with the California Environmental Quality Act (CEQA) is very expensive business. The costs of preparing a typical environmental impact report (EIR) range from $200,000 to more than $1 million. The lead agency incurs those costs initially, and then bills the project applicant a “reasonable fee” for reimbursement of those costs. See Pub Res C §21089(a). Project applicants irked by excessive fees may ask their attorney whether there’s any way to challenge a lead agency’s processing fees under the California Environmental Quality Act (CEQA). Would you know how to respond?

Although applicants may not end up pursuing a CEQA fee challenge for fear that it will alienate the agency reviewing the project, it’s likely that there will be more questions about such challenges as the costs of preparing EIRs and other CEQA documents increase.

When a client asks you for advice on challenging CEQA costs, consider these two questions:

  1. Is the fee “reasonable” under Pub Res C §21089(a)? Note that the burden of showing that the fee is unreasonable would likely be placed on the applicant.
  2. Are the agency’s underlying CEQA decisions reasonable? Public Resources Code §21089(a) probably requires an agency’s underlying CEQA decisions to be reasonable because, under the statutory standard, a fee for an unreasonable action should be considered an unreasonable fee. But there’s no precedent on the reasonableness of agency decisions in this context. Nevertheless, in some instances it might be appropriate to challenge a fee resulting from an unreasonable CEQA processing decision, particularly if an agency requires an applicant to fund an evaluation or a procedure that’s not required by CEQA and that doesn’t bear a reasonable relationship to the project application.

The general rule, however, is to recommend substantial caution in challenging the fee. It may be best to arrange a meeting with agency staff, explain the applicant’s objection to the fee, and propose a compromise solution.

If you and your client ultimately decide to challenge the fees, you’ll unfortunately have no clear roadmap for doing so. Most agencies don’t explicitly set out a procedure for challenging CEQA fees. In an early decision of the Public Utilities Commission (PUC) on overall implementation of CEQA, the PUC found that applicants have a due process right to challenge the reasonableness of such fees. See Decision 81237, 75 CPUC 133 (1973).  At the PUC, this right is afforded through a motion procedure.

In many cases when an agency doesn’t explicitly provide for challenges to the reasonableness of CEQA fees, those fees probably can be challenged under general provisions allowing for appeal of staff determinations within the agency.

For everything you need to know about CEQA and how to advise clients on CEQA issues, turn to CEB’s Practice Under the California Environmental Quality Act. This title is part of CEB’s OnLAW Real Property Law Library.

Check out other CEBblog™ posts on real property topics.

© The Regents of the University of California, 2018. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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