On July 14, 2001, the California Supreme Court today issued its ruling in Save the Plastic Bag Coalition v. City of Manhattan Beach. The court ruled in favor of the City of Manhattan Beach, upholding the City’s decision to ban plastic bags on the basis of a negative declaration. In its opinion, the court dealt with two issues of some consequence for practitioners of the California Environmental Quality Act (CEQA): (1) standing and (2) the fair argument standard. Petitioner, a coalition of plastic bag manufacturers and distributors, claimed standing to maintain a citizen suit under CEQA. On the merits of the case, Petitioner argued that the evidence in the record supported a fair argument that the ban would increase environmental damage, so that an EIR was required. The Supreme Court ruled for Petitioner on the procedural issue and against Petitioner on the merits.

On the question of standing, the court’s ruling was fairly broad. The court considered a lower court’s opinion in Waste Management of Alameda County, Inc. v. County of Alameda (2000) 79 Cal.App.4th 1223, 1238, which subjected corporations to heightened scrutiny when they assert public interest standing. The court noted that “[a]s a general rule, a party must be “beneficially interested” to seek a writ of mandate. … The requirement that a petitioner be “beneficially interested” has been generally interpreted to mean that one may obtain the writ only if the person has some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large.’” That said, courts have afforded more generalized “public interest standing” in cases where the petitioner asserts a public right and the object of the mandamus is to procure the enforcement of a public duty. In such a case, the petitioner need not possess a special interest in the result, since it is “sufficient that he is interested as a citizen in having the laws executed and the duty in question enforced.” The court in Waste Management held, though, that a corporation could not assert public interest standing because the entire purpose of the public interest standing is to give citizens an opportunity to ensure the enforcement of public rights and duties, and “corporations are not generally regarded as ‘citizens.’” The court reasoned that because corporations are typically motivated by corporate interests rather than the interests of citizenship, when a corporation claims public interest standing it must “demonstrate it should be accorded the attributes of a citizen litigant.”

The California Supreme Court rejected this heightened showing required for corporations. The state court, following the trend in the United States Supreme Court, seemed to place corporations and natural persons on equal footing: “we [reject] the Waste Management rule holding corporations to a higher standard in qualifying for public interest standing. Absent compelling policy reasons to the contrary, it would seem that corporate entities should be as free as natural persons to litigate in the public interest.”

On the merits, however, the Supreme Court ruled for the city. The court’s decision on the merits was more narrowly tailored and appeared to be driven more by common sense than doctrine. The formal issue before the court on the merits was what is the legal threshold under CEQA for when a project or ordinance necessitates preparing an environmental impact report, known as an EIR, and more specifically: “Was the city of Manhattan Beach required to prepare an EIR on the effects of an ordinance banning the use of plastic bags by local businesses?” Justice Carol Corrigan, writing for a unanimous court, reversed the lower courts which had held the city had to prepare an EIR before implementing a ban on plastic bags: “We disagree. Substantial evidence and common sense support the city’s determination that its ordinance would have no significant environmental effect. Therefore, a negative declaration was sufficient to comply with the requirements of” CEQA.

This was the first time in several decades in which the court had squarely considered the so-called “fair argument” test that applies to the review of negative declarations and mitigated negative declarations. That test, as articulated by dozens of courts, and the CEQA Guidelines, provides that if there is substantial evidence supporting a fair argument the project may have significant adverse effects, the agency must prepare an EIR. In reaching its decision, the Supreme Court did not deviate far from its prior rulings, but did find that the evidence cited in this case was not substantial evidence, even supporting a fair argument, that the City’s actions would result in significant impacts. The evidence in question was “life cycle” analysis of paper bags and plastic bags. On a global scale, these studies seem to suggest that the manufacture, distribution, use, recycling, and disposal of paper bags may entail more negative environmental consequences than do the same aspects of the plastic bag “life cycle.”

Nevertheless, the court held that what was relevant were not the impacts of paper or plastic bags on a global scale, but on “the actual scale of the environmental impacts that might follow from increased paper bag use in Manhattan Beach.” On a local scale, “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.” That said, the court did emphasize that its conclusions were largely influenced by the very small size of the city (40,000), and added the caveat that “the analysis would be different for a ban on plastic bags by a larger governmental body, which might precipitate a significant increase in paper bag consumption.”

In reaching its conclusions, the court repeatedly emphasized that in CEQA, the analysis should focus on the local environment, citing Public Resources Code section 21151, subd. (b) (“any significant effect on the environment shall be limited to substantial, or potentially substantial, adverse changes in physical conditions which exist within the area as defined in Section 21060.5”) and section 21060.5 (the physical conditions which exist within the area which will be affected by a proposed project, including land, air, water, minerals, flora, fauna, noise, [and] objects of historic or aesthetic significance”). While the court stressed that the focus and depth of the analysis must be on local impacts, CEQA does require a consideration of impacts outside the boundaries of the project area, if such impacts will occur, but “[t]his does not mean, however, that an agency is required to conduct an exhaustive analysis of all conceivable impacts a project may have in areas outside its geographical boundaries. ‘[T]hat the effects will be felt outside of the project area . . . is one of the factors that determines the amount of detail required in any discussion. Less detail, for example, would be required where those effects are more indirect than effects felt within the project area, or where it [would] be difficult to predict them with any accuracy.”’ Here, because the City was not expecting a huge increase in the use of paper bags for a variety of reasons, “the city could evaluate the broader environmental impacts of the ordinance at a reasonably high level of generality.”