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California State Auditor Logo COMMITMENT • INTEGRITY • LEADERSHIP

California Department of Fish and Wildlife
It Is Not Fulfilling Its Responsibilities Under the California Environmental Quality Act

Report Number: 2018-119

California Department of Fish and Wildlife

June 7, 2019

Office of the California State Auditor
Elaine M. Howle, CPA
621 Capitol Mall, Ste. 1200
Sacramento, CA 95814

Dear Ms. Howle:

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The California Department of Fish and Wildlife (Department) appreciates the office of the California State Auditor staff’s time and effort to conduct audit 2018-119. By all accounts, the audit staff and interaction with the Department was cordial, professional, and diligent. On the whole, the Department embraces the recommendations of the report. The recommendations by the California State Auditor are helpful, insightful, well considered and the Department plans to quickly implement those recommendations. The Department has already taken action to fix problems and will build upon progress underway. Nonetheless, we would be remiss if we failed to acknowledge that some of the language in the report is unduly provocative and without critical context.

The Department offers this letter to express its appreciation, acknowledge the recommendations, and offer context that could help the Auditor guard against unfounded conclusions being drawn from the report. To that end, this letter describes important policy context for consideration of the report’s implied standards; offers headings that more closely correspond to the report’s recommendations and the complexities of California Environmental Quality Act (CEQA) implementation; responds to each of the report’s recommendations; and, provides a list of actions already underway by the Department as part of its commitment to do better.

1. Appropriate Review Standard

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The report implies that the Department should target in its roles as trustee and responsible agency under CEQA a 100 percent response rate to all requests for consultation and for commenting on all environmental documents. Taken at face value, that standard would result in thousands of documents requiring reply. The Department prioritizes its effort to be appropriately protective of fish, wildlife, and plant resources consistent with its mission, while mitigating the need for a fee increase. This is simply good government practice. Not all CEQA referrals involve projects that will adversely impact fish, wildlife, and plant resources. Further, the Department would have to significantly increase the CEQA fees under Fish and Game Code section 711.4 to meet a 100 percent response rate. The report itself shows that the Department, at current staffing and corresponding fee levels is unable to meet a 100 percent response rate. The information in the report confirms the prudency of the Department balancing the response rate with a reasonable and appropriate fee.

2. Recalibrating the Report's Title and Certain Headings to Better Reflect the Report's Own Investigative Findings and Recommendations

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The Department recommends tethering the report's title and certain headings more closely to the report's own investigative findings and recommendations. Doing so would better acknowledge the breadth of CEQA compliance completed by the Department but outside of the audit's scope. For example, even accepting the report's assumptions without question, the Report's title does not recognize the overwhelming number of instances in which the Department fulfills its responsible agency obligations. Acknowledging that the report calls into question the Department's compliance with only “some” of its obligations would be much more accurate (e.g., “The Department of Fish and Wildlife: It is Not Fulfilling Some of Its Responsibilities Under the California Environmental Quality Act” (emphasis added)). In addition, adjusting the title and certain headings would acknowledge the practical policy considerations of a fee increase to fund the Department's 100 percent engagement on all referred CEQA documents, absent any prioritization to reflect the potential for benefit to fish, wildlife, and plant resources.

Below the Department provides alternatives to some of the report's headings. In addition, the Department responds to each of the individual recommendations.

Current Draft Heading: The Department Has Failed to Meet Its Obligations as a Responsible Agency Under CEQA

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SUGGESTION: THE DEPARTMENT NEEDS FORMAL POLICIES FOR CEQA-RELATED RESPONSIBILITIES TO ENSURE AN APPROPRIATE LEVEL OF PROJECT CONSULTATION

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When prioritizing CEQA documents for review, Department staff relies on several objective factors including the potential for adverse impacts to sensitive species (e.g., listed pursuant to the California Endangered Species Act (CESA)) or other high-value species or habitats, as well as the size and scope of the project's impacts on these resources. California's significant diversity of species and habitats require staff to recognize and consider local species and habitats when prioritizing projects for CEQA review, and for any given project, this must be done with respect to all other projects in the queue for simultaneous review. In other words, the most potentially impactful projects are prioritized for review at any given time. Therefore, a statewide formal policy that prioritizes CEQA referrals must recognize California's plant, fish, and wildlife diversity and allow for local priority considerations, as well as a consideration for the variable workload that might exist at the time priorities are identified. The Department agrees that more formalized (written) policy direction on how to conduct and prioritize CEQA review and comment would be helpful for staff and it would improve consistency between regional offices.

Current Draft Subheading: The Department Has Not Consistently Consulted and Commented on Development Projects, Allowing Lead Agencies to Approve Projects Without Its Input

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SUGGESTION: THE DEPARTMENT DOES NOT CONSULT AND COMMENT ON 100 PERCENT OF DEVELOPMENT PROJECTS, ALLOWING LEAD AGENCIES TO APPROVE PROJECTS WITHOUT ITS INPUT

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Projects significantly vary in their potential to adversely impact plant, fish, and wildlife resources. Some projects will cause little to no biological resource impacts, while others will have significant adverse impacts to such resources. Department staff prioritizes review of, and comments on, CEQA documents by focusing on those projects that will cause adverse impacts to important biological resources, with particular attention on those projects that will cause substantial impacts to such resources. Reviewing 100 percent of all CEQA referrals, should that become feasible with additional funding and staffing, would disrupt the current accepted standard by lead agencies and the regulated community, as well as divert limited staffing and resources to projects that may not warrant Department consultation. In addition, not all reviewed CEQA documents warrant a formal comment letter. In fact, the Department sometimes determines with initial review that biological resources are acceptably addressed in a given CEQA document and staff then turn their attention appropriately to CEQA documents where that is not the case. 

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Lastly, as the audit report acknowledges, not all lead agencies incorporate feedback provided by the Department. Lead agencies ultimately have the authority under CEQA to decide what is appropriate content of the CEQA document and any related conditions of project approval. While there is a benefit to the Department as a trustee agency under CEQA providing review and comment of CEQA documents, it does not necessarily result in a proportional improvement to the environment even where the environmental consultants, planners, and project proponents have extensive access to the Department's educational materials. In short, the extent to which a particular project ultimately reflects the Department's input relies on numerous factors other than whether the Department responded to a Notice of Preparation.

Current Draft Subheading: The Department's Failure to Comment on Draft CEQA Documents May Slow Its Permitting Process and Lead to Avoidable Harm to the Environment

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SUGGESTION: COMMENTING ON CEQA DOCUMENTS MIGHT REDUCE SURPRISES TO PROJECT PROPONENTS DURING THE SUBSEQUENT PERMITTING PROCESS

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The audit report acknowledges that the requirements of Fish and Game Code Section 1600 et seq. (lake and streambed alteration) and CESA differ from that of CEQA. As a result, CEQA documents do not typically include the level of detail needed for the Department to deem a CESA incidental take application or a notification of a lake or streambed alteration complete, or to issue either permit. That said, Department comments during the CEQA process on what is needed for the permitting process, at least in a general sense, might reduce later surprises to the project proponent during subsequent permitting efforts by the Department. However, it is important to note that responses to CEQA referrals are not the only avenue by which the Department informs the public about its concerns. In addition to the Department's ongoing efforts described below to develop curriculum, train, and provide guidance to Department staff consulting with and providing comments to lead agencies, the Department also provides important information to the public, regulated community, CEQA consultant professionals, and state and local agencies. Much of this information is posted and publicly available on the Department's web page. For example, details regarding the Department's various permitting programs and its role as a lead, responsible, and trustee agency can be found at: https://www.wildlife.ca.gov/Conservation/CEQA.

Current Draft Subheading: The Department Has Not Provided Guidance for its Regional Offices, Which Could Result in Inconsistent CEQA review

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SUGGESTION: THE DEPARTMENT DOES NOT HAVE STATEWIDE WRITTEN POLICY GUIDANCE FOR ITS REGIONAL OFFICES CONCERNING CEQA REVIEW

Regional Offices provide verbal guidance and training to staff on how to prioritize and conduct CEQA review. Having written statewide guidance could improve staff understanding of expectations and lead to a consistent approach.

Recommendations: 1) by December 2019 develop a Departmentwide policy for prioritizing CEQA document review and comment; 2) by December 2019 develop policies and procedures outlining Departmentwide expectations for CEQA review and comment; 3) by March 2020 develop region-specific policies and procedures for CEQA review; 4) by June 2020 develop ongoing training for Department staff that addresses the complexities and technical aspects of CEQA; and, 5) any general rules of application would be in compliance with the Administrative Procedure Act.

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Response: Agree. The Department agrees with these recommendations and will work to implement them in the specified timeframes, noting that any requirements of the Administrative Procedure Act, should they apply to these items, will make compliance with the recommended timelines infeasible. The Department believes that such Department wide and regional procedures, as well as the new training curriculum, should focus on effective protection of fish, wildlife, and plant resources while maximizing the efficiency and efficacy of our roles and obligations under CEQA. As to training, the Department appreciates the need for additional ongoing training for its staff and the importance of developing new teaching curricula and materials to keep pace with dynamic and ever-changing CEQA landscape. CDFW has provided more than a dozen day-long or multi-hour CEQA courses for Department staff since February 2003. In fact, over 275 staff have received CEQA training since 2017. Certain courses provide a detailed overview of CEQA, while others focus specifically on Department participation in lead agency CEQA review and how to write effective CEQA comment letters to lead agencies. These courses are in addition to CEQA courses presented or facilitated with outside contractors by the Department's Habitat Conservation Planning Branch and other less formal, but still structured teaching-oriented presentations by attorneys within the Office of General Counsel. For example, the Department's lead CEQA attorney spent a half-day on two occasions earlier this year with program staff from the Northern and North Central Regional Offices, respectively, to provide an update regarding significant legal developments related to CEQA and their practical application for frontline staff.

The Department Cannot Demonstrate It Used All Available Funding to Fulfill Its CEQA Obligations

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The Department acknowledges that it could improve its tracking of CEQA funds and time spent by staff on CEQA related activities. As such, we agree with the auditor's recommendations in this section of the report. The Department uses its CEQA revenues on CEQA activities. The discrepancy between CEQA revenues and expenditures that accounting records have shown in past years is most likely a result of incomplete tracking of expenditures and staff time spent on CEQA related activities. As noted in Figure 6, this discrepancy existed from 2012-13 through 2015-16, but disappears in 2016-17, with revenues and expenditures virtually equal in that fiscal year. Implementation of the auditor's recommendations will likely reveal a much closer correspondence between CEQA revenues and expenditures in future fiscal years, similar to what was seen in 2016-17. Further, the Department disagrees with the claim that it used CEQA revenues to cover deficits in other programs. Activities outside of CEQA funded by the nondedicated Fish and Game Preservation Fund do not have dedicated revenue sources and a comparison between revenues and expenditures for these activities is inappropriate. The following are the Department's comments on the auditor's recommendations.

Recommendation: To ensure that the Department uses CEQA fees only for CEQA activities, as state law requires, the Department should immediately begin tracking and monitoring CEQA revenues and expenditures separately from other program activities within the nondedicated account in the Fish and Game Preservation Fund.

Department Response: Agree. The Department will develop procedures to track and monitor CEQA revenues and expenditures separately from other activities in the nondedicated Fish and Game Preservation Fund. The most effective method of doing this would be for the Legislature to establish a new fund in statute. The Department will work with the Department of Finance and the Legislature in this regard. If the Legislature establishes a separate fund in statute, this information will be reported annually in conjunction with the Governor's proposed budget in a fund condition statement dedicated to CEQA revenues and expenditures.

Recommendation: To determine more accurately the resources that it needs to review all CEQA documents it receives, the Department should implement a timekeeping mechanism by December 2019 that requires staff to track the hours they spend on CEQA-related activities.

Department Response: Agree. The Department has this capability within its existing time reporting system. The Department will issue direction and provide instructions to employees on how to track hours spent on CEQA-related activities on their monthly electronic timesheets. The Department has made progress toward this goal through recent training provided to all program staff during the Department's transition to FI$Cal. This training covered the correct application of fiscal coding, as well as procedures for tracking and monitoring of expenditures and staff time. The Department also implemented an electronic timekeeping system after the audit period that improves the accuracy of staff time reporting.

Recommendation: To determine the costs for CEQA review and set appropriate fees, the Department should complete its five-year review of program costs and revenues and report to the Legislature by March 2020. To provide the Legislature with a more accurate estimate of the costs of the Department's CEQA activities, the Department should prepare an update to this review no more than two years after it has modified its time tracking procedures.

Department Response: Agree. The Department has conducted many such reviews in recent years to analyze program costs and appropriate fee levels, including the California Endangered Species Act incidental take permit fee established in law in 2016.

Recommendation: To collect all CEQA revenues due, the Department should immediately begin collecting any unpaid fees it identifies in audits of counties.

Department Response: Agree. The Department will begin collecting any unpaid fees it identifies in future audits of counties and work with appropriate counties to address any past audit findings regarding any unpaid fees not collected.

3. List of Actions/Statewide Training Underway

The Department has already undertaken numerous efforts to advance the report's recommendations, which, in turn will help focus the Department's further actions.

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4. Conclusion

In conclusion, we are thankful for the time taken and the work done by the California State Auditor on behalf of the Department. The effort and the audit report elucidate how best to align CEQA with the states' limited resources while balancing ongoing protection of California's fish and wildlife resources. We will work quickly to implement the recommendations made by the State Auditor and we look forward to describing how we are meeting the deadlines as prescribed.

Thank you,

Charlton H. Bonham
Director




Comments

CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM THE CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE

To provide clarity and perspective, we are commenting on the department’s response to our audit. The numbers below correspond to numbers we have placed in the margin of the department’s response.

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We stand by the language we use to describe the department’s challenges related to CEQA. Our report provides appropriate context and sufficient evidence to support our report’s headings and conclusions.

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The standard we used to assess the department’s responses to requests for consultation and to CEQA documents it receives was state law and regulations. As we note, state law requires the department to respond to all requests for consultation. We further note that regulations indicate that the department, as a responsible agency, should comment on CEQA documents for projects that it will later be asked to approve.

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We acknowledge that the department triages the CEQA documents it receives because it does not have the resources to review and respond to all of them. However, as we state here, the department does not have policies describing how its staff should triage CEQA documents to ensure it is consistent in the kind of projects it prioritizes.

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The department’s contention that fees would significantly increase if it were to meet a 100 percent response rate is premature. As we describe beginning here, the department cannot estimate the full cost of the program or determine how many additional resources it may need because it does not accurately track staff time related to CEQA. The department cannot accurately assess the fee level it will require until it can also accurately assess the resources it needs.

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The department’s citation of an “acceptable standard” misdirects the reader. We base the analysis in our report on the standards in state law and regulation that, as we describe in Comment 2, state that the department shall respond to requests for consultation and should comment on CEQA documents. Further, as we state here, although state law does not require the department to provide comments on every draft CEQA document in its role as a responsible agency, regulations state that it should comment on the adequacy of the draft environmental impact report or negative declaration for projects that it will later be asked to approve.

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The department is conflating its responsibilities under CEQA with those of the lead agency. Whether the department responds to a notice of preparation is entirely within its control. The fact that the lead agency controls other parts of the process does not absolve the department from fulfilling its responsibilities. We note that because the department has jurisdiction over California’s fish and wildlife resources, its input on a project’s impacts on sensitive habitats and species is critical. As a result, we conclude that when the department does not fulfill its responsibilities, a lead agency may not be aware of potential significant impacts to fish and wildlife resources that it should consider.

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The department’s response mentions ways in which it educates the general public; however, our review focuses on how the department’s input on specific projects during the CEQA review process could benefit applicants for those projects later when seeking permits from the department.

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The department agrees with our recommendation, but adds that it has already offered some training. However, we note that the conservation branch chief stated that the department’s basic CEQA course did not describe how to complete a review and that the department’s trainings on CEQA are not mandatory. Neither he nor others in the department to whom we spoke mentioned the trainings the department lists in its response here and here. As we state here, the current lack of common training across all CEQA staff risks those staff inconsistently reviewing CEQA documents and applying different standards to those documents.

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The department is correct that its accounting records show that CEQA expenditures matched revenues for fiscal year 2016–17. However, as we discuss in a note on Figure 6, the department has not finalized its accounting for CEQA fees in fiscal year 2016–17; thus a definitive conclusion that expenditures match revenues is premature. Further, the department used CEQA revenues to cover deficits in other areas through the way it has structured its nondedicated account. We quote the department’s explanation that it uses surpluses from programs within the nondedicated account to cover deficits in other programs within that account before it uses the account’s reserves. As the department commingles all of the funds within this account and does not track CEQA revenues and expenditures separately, the department cannot demonstrate it used all CEQA funds for CEQA purposes.






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