Guidance for Preparers of Growth-related, Indirect Impact Analyses

This guidance for preparers of growth-related, indirect impact analyses includes the introductory information below and five additional chapters:

• Regulatory Framework and Definitions
• Land Use, Transportation and Growth
• Key Concepts for Growth-related Impact Analyses
• Making the First Cut
• Performing the Analysis

The guidance focuses on growth-related, indirect impact analyses for Caltrans' surface transportation projects in California that are subject to the National Environmental Policy Act (NEPA) and/or the California Environmental Quality Act (CEQA). NEPA and CEQA require that the direct, indirect, and cumulative effects of proposed actions be assessed and disclosed. Indirect effects are generally defined as those that are caused by a project, but unlike direct effects, occur later in time or are farther removed in distance. Indirect effects can range from physical environmental effects, such as downstream sedimentation resulting from project construction, to growth-related effects resulting from changes in accessibility to a previously undeveloped area or a redistribution of growth.

The guidance specifically deals with the subset of indirect effects associated with highway projects that encourage or facilitate land use or development that changes the location, rate, type, or amount of growth—and are referred to in the guidance as “growth-related impacts.” Not every project will need a growth-related impact analysis; such an analysis typically will be needed in the environmental document for those highway projects that are built along a new alignment and/or provide new access.

Growth-related impacts and the need for analysis should be considered early in project development. Where such impacts are identified, appropriate and reasonable steps to avoid or minimize such impacts also should be considered early and incorporated into the project and the environmental document. A growth-related impact analysis assists with complying with the requirements of NEPA and CEQA, which include (1) considering environmental consequences of project actions in the planning process as early as possible; and (2) providing a well-documented and sound basis for government decision making.

The Federal Highway Administration (FHWA), the California Department of Transportation (Caltrans), and the U.S. Environmental Protection Agency (USEPA) recognize the importance of thoroughly considering indirect impacts during the preparation of environmental documents. An interagency Work Group representing FHWA, Caltrans, and USEPA developed this guidance to assist Caltrans’ practitioners (environmental staff, project managers, and consultants) responsible for preparing environmental documents pursuant to NEPA and CEQA. While FHWA, USEPA, and other agencies nationwide have prepared other guidance papers on this subject, this document was prepared to address growth-related impact analyses expressly for highway projects in California.

This guidance will help practitioners identify whether a growth-related impact analysis is needed for a proposed transportation project. It also will help practitioners prepare an analysis that is sound and well documented. Further, the data developed during the analysis can be used to support other project-related analytical requirements, such as compliance with USEPA’s Section 404(b)(1) Guidelines.

If the lead agency determines it is needed, a growth-related impact analysis would be developed concurrently with the direct, indirect, and cumulative impact analyses for the proposed transportation project’s environmental document.

The Work Group intends for this guidance to be practical and flexible, and recognizes that the need for and scope of a growth-related impact analysis will vary according to type and scale of the project proposed, the area where the project is located, and the resources of concern potentially affected (e.g., wetlands, vernal pools, threatened/endangered species, prime farmland, Section 4(f) property, etc). The guidance provides several tools and approaches that can be applied, based on the potential effects of the proposed project, the type or condition of resources under consideration, and the professional judgment of the practitioner performing the analysis. The guidance is presented in the following chapters:

• Chapter 1 - Introduction: Provides background about the guidance, its intended audience, and purpose.
• Chapter 2 - Regulatory Framework and Definitions: Provides definitions and discusses the regulatory and policy framework regarding indirect impacts.
• Chapter 3 - Land Use, Transportation and Growth: Explores the complex relationship between land use, growth, and transportation projects in a California context.
• Chapter 4 - Key Concepts for Growth-related Impact Analyses: Discusses the concepts of “reasonably foreseeable” and “causality” as related to assessing growth-related impacts.
• Chapter 5 - Making the First Cut: Provides a screening approach for identifying the need for, and extent of, a growth-related impact analysis.
• Chapter 6 - Performing the Analysis: Identifies the suggested steps for conducting a growth-related impact analysis, and some tools that could be used to perform the analysis. It also emphasizes the need to consider avoidance and minimization opportunities for identified resource impacts.

A hypothetical, illustrative example of a growth-related impact analysis, the Canyon City Transportation Improvement Project - An Illustrative Example, follows Chapter 6 of the guidance. The guidance also provides highlighted links to more detailed references, manuals, and policy guidance documents related to growth-related impacts, and to more detailed discussions on specific topics.

On September 18, 2002, President George W. Bush signed Executive Order (EO) 13274, Environmental Stewardship and Transportation Infrastructure Project Reviews. This EO established an Interagency Task Force to advance environmental stewardship and streamlining efforts, to coordinate expedited transportation decision making, and to address priority projects. The Task Force established an interagency Work Group on indirect and cumulative impacts to evaluate this topic and identify opportunities where greater interagency coordination and collaboration could lead to improvements in the decision-making process for projects. The Task Force Work Group released its Draft Baseline Report on March 15, 2005. The appendices of the Draft Baseline Report include a comprehensive annotated bibliography and links to guidance documents, annotations on case law, and other helpful materials.

The Work Group prepared this guidance for environmental professionals with varying degrees of expertise. The modular structure of the guidance provides flexibility so that practitioners can refer to specific topics. To build a foundation for growth-related impact analysis, this guidance provides the following:

• Definitions of terms fundamental to growth-related impact analysis.
• A suggested approach to help determine whether an analysis is needed.
• A suggested step-by-step approach for performing the analysis.
• Examples of best practices and tools to use in the analysis.

The guidance was prepared to address California’s specific challenges. The guidance will help practitioners to: (1) identify when an analysis should be performed; (2) identify the appropriate resources to analyze; (3) define the geographic and temporal parameters of the analysis; (4) analyze growth in relation to the project; (5) select the appropriate methods to assess resource impacts; and (6) make supportable impact findings. The guidance emphasizes that early communication, coordination, and involvement among federal, state, and local agencies helps avoid conflict and delay, and allows for the early consideration of avoidance and minimization opportunities to reduce resource impacts.

The material presented in this guidance is meant to be used in conjunction with—but not substituted for—agency policies, regulations, and legal requirements. Each agency contributing to the guidance recognizes that the approach to growth-related impact analysis may vary widely depending on the nature and context of the project proposed, the affected resources, the extent of available data, and other factors. The agencies also recognize that the guidance may be updated to reflect new issues or challenges as they arise. Notwithstanding the project-appropriate variations in method and procedure, FHWA, Caltrans, and USEPA Region IX agree with the advice presented in this guidance document concerning content, methods, analytical approach, and growth-related impact analysis formats.

The agencies that developed this guidance are interested in your views. If you have comments or suggestions, please contact:

Kelly Dunlap, Chief
Environmental Management Office
Caltrans
P.O. Box 942874, Mail Station 27
Sacramento, CA 94274-0001
Phone: 916-.651-8164
Fax: 916.653.7757
Email:

The CEQA Guidelines define indirect impacts as:

“Indirect or secondary effects that are caused by the project and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect or secondary effects may include growth-inducing effects and other effects related to induced changes in the pattern of land use, population density, or growth rate, and related effects on air and water and other natural systems, including ecosystems [CEQA Section 15358(a)(2)].”

Section 15126.2(d) of the CEQA Guidelines states that a growth-inducing impact could occur if:

“…the proposed project could foster economic or population growth, or the construction of additional housing, either directly or indirectly, in the surrounding environment. Included in this are projects that would remove obstacles to population growth (a major expansion of a waste water treatment plant might, for example, allow for more construction in the service areas). Increases in the population may tax existing community service facilities, requiring construction of new facilities that could cause significant environmental effects. Also discuss the characteristics of some projects that may encourage and facilitate other activities that could significantly affect the environment, either individually or cumulatively. It must not be assumed that growth in any area is necessarily beneficial, detrimental, or of little significance to the environment.”

Additional information on CEQA and indirect impacts can be found in Caltrans Guidance for Preparers of Cumulative Impact Analyses, CEQA Guidelines for Cumulative and Indirect Impacts.

Section 404 of the CWA regulates the discharge of dredged or fill material into waters of the United States to meet the intent of restoring and maintaining the chemical, physical, and biological integrity of the nation’s waters. The U.S. Army Corps of Engineers and U.S. Environmental Protection Agency (USEPA) share responsibility under Section 404. The Corps of Engineers administers the 404 program, including issuing permits, with the USEPA providing oversight.

The USEPA’s 404 (b)(1) Guidelines (40 CFR 230 subpart B) specify that a permit can be issued for a discharge of dredged or fill material into waters of the United States only if the discharge is determined to be the least environmentally damaging practicable alternative (LEDPA), so long as the alternative does not have other significant adverse environmental consequences [40 CFR 230.10(a)]. To make this determination, the 404(b)(1) Guidelines require an analysis of cumulative and secondary effects on the aquatic ecosystem. Secondary effects are defined as the effects on an aquatic ecosystem that are associated with a discharge of dredged or fill materials into waters of the United States, but do not result from the actual placement of the dredged or fill material. For the purposes of this guidance, secondary and indirect effects mean the same thing.

The Corps of Engineers makes a LEDPA determination by considering both the direct and indirect impacts of the proposed project, including growth-related, indirect impacts. As shown in Figure 2-3, it is possible for an alternative with greater direct impacts, but fewer indirect impacts (including growth-related impacts) to be selected as the LEDPA (Alternative B). In this example, the alternative with the fewest direct impacts is Alternative A, whereas the alternative with the fewest total impacts is Alternative B.

Figure 2-3. LEDPA Determination

Many factors influence land use and development in an area, as illustrated in Figure 3-1. Factors such as population and economic growth, desirability of certain locations, the costs and availability of developable land, physical and regulatory constraints, transportation, and the costs of sewer and water services all strongly influence where, when, and what type of development takes place.

Many of these factors also influence the policies and decisions associated with land use and growth. The key players include households, businesses, developers, and local governments (see FHWA’s Influence of Transportation Infrastructure on Land Use and NCHRP Report 423A, Land Use Impacts of Transportation: A Guidebook). The interaction of supply and demand for housing and business properties in the land market produces the pattern of development within an area. Within this market, households and businesses create demand for new buildings and locations while developers provide these products within the supply and cost constraints of local government. External factors, such as zoning laws, incentive programs, and proximity of public transit and roadways also influence this relationship.

Households weigh the costs of different locations with their needs and preferences for living space, neighborhood type, quality of schools and other public services, and access to jobs, goods, services, and recreation. Various types of households weigh these factors differently as they consider what type and location of housing will best satisfy their needs and are within their budgets.

Figure 3-1. Factors Influencing Land Use and Development

Source: FHWA May 1999. An Overview: Land Use and Economic Development in Statewide Transportation Planning.

Businesses also balance the costs of various locations with their need to be accessible to workers, customers, supplies, and information, and to be attractive places to work and shop. These needs often lead them to cluster with other businesses in downtowns, suburban activity centers, and office and industrial parks. They also may outbid other uses for the highly accessible and visible places even though space may cost more in these locations.

Real estate developers respond to this market demand by evaluating the needs and preferences of their customers—most often homebuyers and commercial and industrial business tenants—and then by building new development projects that respond to that market. These new developments can compete with the existing stock of buildings for this market. Sometimes new developments augment existing supply in an expanding market; sometimes they compete with existing supply in a stagnant market, drawing tenants and buyers away from older properties.

Local government actions attract or discourage development by influencing the supply of land available for development/redevelopment; the densities at which development can occur; and directly or indirectly the cost of development. Developers’ projects also can be constrained by the ability of local governments to provide needed infrastructure.

Further information about the factors that influence growth and a list of possible data sources is found in NCHRP Report 466, Desk Reference for Estimating the Indirect Effects of Proposed Transportation Projects (Course Module 4, Step 2 – Identify Study Area Directions and Goals).

Land use and transportation are inextricably linked. Everything that happens to land use has transportation implications and transportation actions may affect land use. Transportation agencies such as Caltrans play a role in land use changes by providing infrastructure that can improve mobility to different destinations, and/or open up access to new locations. At the same time, new land development generates travel to that location and this additional travel generates the need for new transportation facilities. The extent that transportation influences development or the extent that land use influences transportation is a matter of ongoing debate (see Re:NEPA ).

Accessibility

Accessibility is the most direct link between transportation and land use. The concept of accessibility is key to understanding how transportation and land use relate to one another (NCHRP Report 423A). Transportation promotes spatial interaction between activities or land uses. This interaction is measured by accessibility, which reflects both the attractiveness of potential destinations and ease of reaching them. The pattern of land uses is important because it determines the opportunities or activities that are within range of a given place. The potential for interaction between any two places increases as the cost of movement between them—either in terms of money or time—decreases. Consequently, the structure and capacity of the transportation network affect the level of accessibility.

Transportation projects may reduce the time-cost of travel, thereby enhancing the attractiveness of surrounding land to developers and consumers. When the change in accessibility provided by a transportation project facilitates land use change and growth in population and employment, one outcome can be growth-related impacts to environmental resources.

Research has shown that although accessibility improvements rarely change the rate of growth of a region (such as a county or metropolitan area) changes in accessibility can influence the direction of growth in a region and the rate of growth in local areas. Even in areas where there is no net change in the overall amount of growth, the design or location of a transportation project can alter the patterns of land use and extent of potential impacts to resources. For example, the placement of an interchange may not change the net growth along a stretch of highway, but it could change where the growth occurs. Placing the interchange near a relatively intact wetland, rather than near a brownfield , could have very different consequences on environmental resources of concern.

Growth in California

Rapid population growth continues in California. In 2005, the state’s population exceeded 36.8 million persons (Department of Finance Press Release May 2, 2005). The population is expected to increase by an average of 600,000 persons per year for the foreseeable future. If this projection holds, by 2020 the state’s population will reach over 45 million, and by 2030 it will be nearly 52 million (California Transportation Plan 2025, May 2004).

The Department of Finance projects this population growth and forecasts its distribution around the state. The Department of Housing and Community Development, together with the regional Councils of Government (COG) throughout the state, estimate how many housing units each region and locality will be required to accommodate this growth, although the state’s ability to enforce this requirement on local governments is limited.

Caltrans has a 20-year planning horizon consistent with standard FHWA practice for transportation project planning. In addition to Department of Finance projections, Caltrans sizes facilities based on travel demand projections prepared by Metropolitan Planning Organizations (MPO) in urban areas and county projections in rural areas. Travel demand forecasts are developed directly from population projections prepared by COGs, which are often (though not always) the same entities as the MPOs. The population and land use forecasts are based on the local government’s general plan.

In California, local governments—not Caltrans or FHWA—control the amount, location, and timing of new real estate development. A local government is required by state law to adopt a general plan. This plan should accommodate the jurisdiction’s fair share of future housing as determined by the Department of Housing and Community Development and the COG. Although the state’s ability to enforce this requirement is limited, most local governments do take this responsibility seriously. The general plan also reflects the community’s vision for how and where land is developed, preserved, or redeveloped.

The general plan can be a good source for obtaining information about expected growth and development patterns that are likely to unfold in a community. A general plan addresses the following seven elements (William Fulton and Paul Shigley, Guide to California Planning):

• The land use element deals with population density, building intensity and the distribution of land uses within a city or county.
• The circulation element deals with all major transportation improvements. It serves as an infrastructure plan and must address the development patterns expected by the land use element.
• The housing element assesses the need for housing for all income groups and lays out a program to meet those needs.
• The conservation element deals with flood control, water and air pollution, and the need to protect sensitive resources, such as endangered species habitat, wetlands, and prime farmland.
• The open-space element provides a plan for the long-term conservation of open space in the community.
• The noise element identifies noise problems in the community and suggests measures for noise abatement.
• The safety element identifies seismic, geologic, flood, and wildfire hazards and establishes policies to protect the community.

CEQA review is required when general plans are adopted, amended, or updated. NEPA review is not required because preparing or amending a general plan is not a federal action. Caltrans' role in the land-use planning and development review process is limited to intergovernmental review of projects that affect the state highway system.

Land use change and the precise details of new development are not easily predicted and the reliability of land use plans can be variable. Even if a proposed transportation project is in a local agency’s general plan, factors at the time of project analysis could create a situation in which the project may contribute to growth-related impacts. In addition, Fulton and Shigley (2005) explain that because general plans are revised every 10 to 15 years at most, the plans may be out of date and market conditions may have changed. Accordingly, general plans should not be used as the sole source of reliable land use information.

Key Transportation Growth Issues

Much of the guidance provided by CEQ, FHWA, and other agencies concerning growth-related impact analysis appears to focus on transportation projects whose purpose is to stimulate growth (i.e., growth is a part of the project’s purpose). In California, projects are rarely designed to encourage or facilitate growth. Most Caltrans capacity-increasing projects are proposed as a response to traffic congestion that results from growth that has already occurred or will soon occur, rather than attracting new growth to an area that otherwise would not receive it. From this perspective, growth causes the project—the project is not designed to cause growth. Hence, when California projects have growth-related impacts, it is usually an unintended outcome of the project.

Even if the intended effect is to respond to growth that has occurred or is projected to occur, an unintended result of reducing congestion could be to increase accessibility—which could, in turn, affect the timing and location of additional growth and possibly drive growth into areas where growth was not planned or may not otherwise be foreseeable. This growth also could result in increased pressure on resources in the area.

Analyzing these types of growth-transportation relationships can be difficult. Nevertheless, this is an analysis required by NEPA and CEQA. Chapter 5, Making the First Cut and Chapter 6, Performing the Analysis are designed to help the practitioner evaluate whether and how a transportation project may lead to growth-related impacts. When growth-related impacts are reasonably foreseeable, the guidance emphasizes the need for the Project Development Team (PDT) to consider and incorporate avoidance and mitigation measures for potential resource impacts. Chapter 4, Key Concepts for Growth-related Impact Analyses, discusses what makes an action or an impact “reasonably foreseeable.”

CEQ provided the following guidance discussing the meaning of the term “reasonably foreseeable:”

“The EIS must identify all the indirect effects that are known, and make a good faith effort to explain the effects that are not known but are ‘reasonably foreseeable’ [Section 1508.8(b)]. [I]f there is total uncertainty about the future land owners or the nature of future land uses, then, of course, the agency is not required to engage in speculation or contemplation about their future plans. But, in the ordinary course of business, people do make judgments based upon reasonably foreseeable occurrences. It will often be possible to consider the likely purchasers and the development trends in that area or similar areas in recent years; or the likelihood that the land will be used for an energy project, shopping center, subdivision, farm or factory. The agency has the responsibility to make an informed judgment, and to estimate future impacts on that basis, especially if trends are ascertainable or potential purchasers have made themselves known. The agency cannot ignore uncertain, but probable, effects of its decisions.”

In other words, reasonably foreseeable events are those that are likely to occur or are probable, rather than those that are merely possible. This means that those effects that are considered possible, but not probable, may be excluded from NEPA analysis. There is an expectation in the CEQ guidance that judgments concerning the probability of future impacts will be informed ones, rather than based on speculation. At the same time, the agency can and should use its own informed judgment in order to make reasoned predictions.

A review of case law regarding “reasonably foreseeable” actions and effects can be found in NCHRP Report 466, Desk Reference for Estimating the Indirect Effects of Proposed Transportation Projects (Course Module 2 – Review of Case Law on Indirect Effects Evaluation), and in the Draft Baseline Report, Executive Order 13274, Indirect and Cumulative Impacts Workgroup (March 2005).

A confident prediction of whether growth is reasonably foreseeable requires judgment and needs to be based on information obtained from reliable sources. Coordination with local land use agencies and officials, including the review of adopted plans and similar documentation, if available, is important.

Assessing the growth-related impacts of a proposed transportation project can be thought of as a three-part process:

1. What is the reasonably foreseeable growth and land use change without the project? What is it with the project?
2. To what extent will the project influence the overall amount, type, location, or timing of that growth?
3. Will project-related growth put pressure on or cause impacts to environmental resources of concern?

In thinking about this process, it is important to understand that growth per se is not really what matters. What matters is the potential impact that this growth may have on resources of concern. For there to be a growth-related impact, the practitioner must find that growth is a reasonably foreseeable consequence of a transportation project (even in combination with other factors)-and that growth would impact resources of concern.

Determining whether growth is reasonably foreseeable can be a difficult task. Text Box 1 provides an example discussing the difference between probability and certainty. It illustrates the significance of distinguishing between a prediction (the probability something will happen) and the reliability of that prediction (the level of certainty). Thus, it is not just the predicted probability of something happening that makes it foreseeable, but also the reliability of those predictions. The practitioner should have a qualitative sense of how reliable his/her conclusions are based on the reliability of the source data.

The extent to which land use influences transportation and vice versa is a matter of ongoing debate. Statisticians say, “Correlation does not imply causation” (see Text Box 2). Growth is not necessarily caused by a transportation project. If the potential for growth in an area is inevitable and consistent with local land use plans and current trends, and the transportation project would not influence growth, then there would be no growth-related impacts attributable to the project. The question that must be analyzed is whether the transportation project will change the location, rate, type, or amount of growth. For example, how much of the future growth will occur anyway (no-build) and how much will occur if the transportation project is built? The difference between these two projections is the amount of growth that would not occur “but for” the project and is a growth-related impact.

The practitioner needs to consider these concepts to determine if growth will be a reasonably foreseeable effect of a transportation project. It would be unusual to conclude that a project would have no growth-related impact issues associated with a project without at least performing a “first-cut” screening (see Chapter 5, Making the First Cut). Likewise, a practitioner cannot assume a causal relationship exists between future land use changes and the project without further analysis.

Consideration of growth-related impacts should begin early in the project development process. The first-cut screening is used to determine whether the potential for growth-related impacts is a project issue that needs to be evaluated in the environmental document. After completing the first-cut screening, the practitioner will have concluded and documented that either: (1) growth-related impacts as a result of the project are not reasonably foreseeable; or (2) further investigation or analysis is required. Any potential for growth-related impacts also should be discussed at Project Development Team (PDT) meetings, so that opportunities for avoidance and minimization can be explored and documented.

At the beginning of the Project Approval and Environmental Document (PA&ED) stage, the practitioner should review the Preliminary Environmental Analysis Report (PEAR) for any preliminary conclusions regarding growth-related impacts. The practitioner also should talk with members of the PDT who worked on the project during the Project Initiation Document (PID) stage, especially the Project Manager and environmental staff. There are three possible outcomes from this review:

• If the PEAR concludes that growth-related impacts are not reasonably foreseeable, the practitioner should examine the basis for this conclusion and verify that this is still the case, taking into consideration any project changes and new information. If the conclusion is still valid, no further analysis is necessary and the conclusion should be stated in the environmental document. If the practitioner determines that a closer look is warranted, then a growth-related impact analysis should be conducted as described in Chapter 6.
• If the PEAR concludes that there is potential for growth-related impacts, the practitioner should conduct a growth-related impact analysis as described in Chapter 6.
• If the PEAR is silent about growth-related impacts, the practitioner should perform a first-cut screening as described below. Based on the outcome of the screening, the practitioner either documents that growth-related impacts are not reasonably foreseeable, or performs a growth-related impact analysis. Chapter 6 of this guidance describes the suggested steps for conducting the analysis.

If the first-cut screening concludes that there is not a growth-related impact issue with the proposed project, the document the process and conclusions for the file.

If the first-cut screening concludes that a growth-related impact analysis is necessary, the practitioner should: (1) document the process and results of the first-cut screening for the file; (2) budget the time and cost necessary for undertaking the work; (3) consider avoidance and minimization measures early when refining the project alternatives; and (4) discuss any potential issues with the Project Development Team (PDT). Chapter 6, Performing the Analysis, describes the steps for conducting a growth-related impact analysis and some tools that could be used to perform the analysis.