The California Supreme Court recently weighed in on the critical issue of the proper baseline to be used in assessing the environmental impacts of a proposed project under the California Environmental Quality Act (CEQA). [Agencies must use a "baseline" from which to determine whether a project's environmental effects will be "significant."] In Communities For a Better Environment v. South Coast Air Quality Management District, et al., 48 Cal. App. 4th 310 (2010), ConocoPhillips Company argued that the proper baseline for environmental analysis of a project at a petroleum refinery employing existing equipment should be the maximum permitted operating capacity of the equipment, even if the equipment is operating below those levels at the time the environmental analysis is commenced. The Court rejected that argument, holding that the baseline for CEQA analysis must be the "existing physical conditions in the effected area" (i.e., "real conditions on the ground"), rather than the level of development or activity that "could" or "should" have been present according to a plan or regulation. This confirms the California CEQA Guidelines requirement that the baseline consist of the physical environmental conditions in the vicinity of the project as they exist at the time the notice of preparation of the EIR is published or at the time the environmental analysis begins. 14 Cal. Code Regs. §15125(a). The National Environmental Policy Act (NEPA) has similar requirements. NEPA also requires establishment of a baseline against which to compare the impacts of the proposed project. And, as with CEQA, the NEPA baseline usually consists of the pre-project environmental conditions. The Ninth Circuit Court of Appeals considered the baseline issue in American Rivers v. Federal Energy Regulatory Commission, 187 F.3d 1007 (9th Cir. 1999), where it held that use by the Federal Energy Regulatory Commission of existing environmental conditions at a hydroelectric power facility to evaluate a re-licensing proposal was the proper baseline, rather than a "theoretical reconstruction" of what the river basin would have been like if projects had never existed, as argued by several conservation and environmental organizations. As shown in Communities For a Better Environment and American Rivers, project proponents often confuse "baseline" with the "no-action" alternative. Both CEQA and NEPA require that an EIR/EIS include an analysis of the environmental effects if the project is not approved or implemented, i.e., a "no action" alternative. However, the purpose of the no-action analysis is to compare alternatives, not to establish a baseline. The definition of the no-action alternative will vary depending on the nature of the proposed project. For some projects, the existing environment will not change if the project is not approved, and the no-action alternative and baseline will be the same. For other projects, rejection of the project will not preserve existing environmental conditions, and the no-action alternative will be different from the baseline. Public agencies preparing environmental documents and agencies, organizations and others reviewing environmental documents should understand this important distinction between the environmental baseline and the no-action alternative.
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