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When Environmental Law Becomes a Business: CEQA Abuse in California’s Inland Regions

California’s environmental review process was designed to give communities a voice in decisions that affect their air, water, and land. In the decades since CEQA’s passage, it has become something additional: a revenue source for organizations that have learned to extract settlement payments from developers by threatening CEQA litigation regardless of the project’s actual environmental profile.

This is not a theoretical problem. It is documented, named — “greenmail” in the development industry — and increasingly recognized as a systemic dysfunction in California’s land use process. The state legislature has made multiple attempts to reform CEQA to reduce its abuse potential. Each attempt has encountered resistance from the organizations that benefit from the status quo.

In Imperial Valley, where the stakes are high and the documented demands are large, the CEQA greenmail problem is not abstract. It is the $83 million demand that CTR received from CCV. It is the manufactured CEQA exposure that the IVDC federal lawsuit alleges was coordinated specifically to create financial leverage. It is the litigation tax on investment that falls ultimately on the workers who would have been hired by projects that chose to build elsewhere.

How the Abuse Pattern Works in Practice

Step one: identify a discretionary approval — a project that required a government agency to exercise judgment. CEQA applies to discretionary approvals. Step two: file a CEQA challenge, or threaten one. The challenge does not need to be legally strong. It needs to be credible enough that the developer’s attorneys advise taking the litigation risk seriously. Step three: approach the developer for a settlement. Frame the payment as a “community benefit agreement” or a “mitigation fund.” Make the number large enough to generate organizational revenue but small enough that it costs the developer less than continued litigation.

The environmental review is not the point. The settlement is the point. Organizations that operate this model typically file the same pattern of objections against multiple projects in the same cycle, negotiating settlements with each developer separately. The cumulative revenue can be substantial. The cumulative deterrent effect on investment can be severe.

What Makes This Different From Legitimate Advocacy

Legitimate environmental advocacy uses legal tools to achieve environmental outcomes. A lawsuit filed to prevent an actually harmful project, insisting on a genuine environmental impact analysis, fighting to establish conditions that reduce real harm — this is what CEQA was designed to enable. The community benefit is in the environmental protection, and the settlement, if it happens, reflects genuine mitigation requirements.

Greenmail uses legal tools to achieve financial outcomes. The environmental claim is the mechanism, not the goal. The settlement payment goes to the organization, not to environmental mitigation or community benefit. The project that was “opposed” proceeds after the settlement, often with no changes to its design — because the design was never the real problem.

The distinction matters because the organizations that use this model benefit from the credibility that legitimate environmental advocacy has earned. They invoke the language of environmental protection and community health while pursuing outcomes that have nothing to do with either. The communities they claim to represent deserve the full picture.

The Imperial Valley Stakes

Imperial Valley is at the center of two of California’s most significant emerging economic opportunities: Lithium Valley and technology infrastructure. Both depend on large private investment in projects with significant environmental footprints. Both are vulnerable to organized CEQA opposition by organizations with financial motives to slow or block development.

If greenmail becomes the established toll on development in this region, the economic opportunities that the Valley’s residents need — the union construction jobs, the tax revenue, the permanent operational positions — will be priced out of existence. The settlement demands will be included in project cost projections. The cost projections will determine whether projects get financed. The financing decisions will determine whether Imperial Valley captures its economic future or watches it move to Nevada.

CEQA reform is a state-level policy question. But the community-level response is also available: naming what is happening, holding organizations accountable for documented demands, and insisting that the legal framework of environmental protection not be used as a private revenue mechanism at the expense of the community’s economic future.

Why Rural California Needs Data Centers More Than Silicon Valley Does

Silicon Valley is full. The land is expensive, the power grid is constrained, and the water is scarce. The hyperscale data centers that train AI models and process the world’s information can’t be built there at any price that makes economic sense. So the industry moved — to eastern Washington, rural Iowa, West Texas, northern Virginia — to places that have abundant land, access to power, and room to build at scale.

Imperial Valley has all of those things. It also has something most of those competing locations don’t: a geothermal energy resource that can power next-generation AI infrastructure with zero-carbon electricity, and a local workforce that needs the jobs badly enough that you don’t have to offer equity packages to fill construction crews.

The question is not whether the Imperial Valley Data Center is a good fit for this region. The question is whether this region will make the institutional choices necessary to capture the opportunity.

The National Pattern

Microsoft’s data center campus in Quincy, Washington transformed a small agricultural community into one of the most significant technology infrastructure hubs in the world. Google’s data centers in rural Iowa have generated hundreds of millions of dollars in local tax revenue and created thousands of construction and operational jobs in counties that had no realistic alternative economic development path. Meta’s facility in Prineville, Oregon became the economic anchor of a community that had watched its timber industry collapse.

In each of these cases, the pattern was similar: a region with cheap land, reliable power, and a workforce hungry for industrial-wage employment received a major technology infrastructure investment that restructured its local economy. The counties that said yes to these projects — and fought for them against the inevitable opposition — transformed their fiscal positions, their school systems, and their residents’ economic prospects.

The counties that said no, or whose institutional resistance made approval too costly and slow, are still waiting for the next opportunity. Some are still waiting.

What Imperial Valley Has That Others Don’t

Imperial Valley’s energy infrastructure is unusual. The Imperial Irrigation District operates an independent grid — not subject to CAISO transmission constraints, not dependent on the same overloaded southern California infrastructure that limits development in coastal communities. IID has generation capacity and the ability to accommodate major new industrial loads in ways that grid-dependent utilities cannot.

The region sits on one of the world’s most significant geothermal resources. The same Salton Sea brine that carries the lithium that Lithium Valley developers are racing to extract also carries thermal energy that can generate baseload renewable electricity at industrial scale. A data center campus co-located with geothermal generation creates a vertically integrated energy-compute stack that no coastal California location can replicate at any cost.

Add the I-2 heavy industrial zoning that makes the specific IVDC site legally available by right — without the discretionary reviews and community approval processes that add years and tens of millions to comparable projects in other jurisdictions — and the case for Imperial Valley as a premier data center location is not just plausible. It is compelling.

The Cost of Saying No

Rural communities that block major industrial investment don’t return to a neutral baseline. They return to a trajectory of gradual fiscal deterioration, population loss, and declining public services. The young people who leave for better opportunities don’t come back. The businesses that serve a working population contract. The tax base erodes, which reduces services, which accelerates outmigration, which further erodes the tax base.

This is not speculation. It is the documented history of dozens of rural California communities that didn’t diversify their economic base before their primary industry contracted. Imperial Valley has managed to sustain itself on agriculture longer than many comparable regions, but the structural pressures are identical.

The IVDC is not the only economic development opportunity the Valley will ever see. But it is the largest one currently on the table, and it has already cleared the most significant legal and regulatory hurdles. The people organizing to block it have not identified what they think should come instead. That is a significant omission, and the residents who would benefit from the project deserve to ask for an answer.

CEQA Was Written to Protect Communities, Not to Extort Them

The California Environmental Quality Act was signed into law in 1970. Its purpose was straightforward: require state and local agencies to identify and disclose the environmental impacts of their decisions, and consider alternatives and mitigation measures before approving projects with significant effects. It was an accountability tool — designed to make government decision-making transparent and to give communities a meaningful voice in projects that would affect their environment.

Fifty-five years later, CEQA is something else entirely in many of its applications. It is, by documented evidence, one of the primary mechanisms through which opponents block, delay, and financially burden development projects regardless of their actual environmental impact. And in Imperial County, the effort to force the IVDC into a CEQA review process it is legally exempt from is a case study in exactly this misuse.

How the Exemption Works — and Why It Applies

CEQA applies to discretionary approvals — decisions that require a government agency to exercise judgment about whether to approve a project and under what conditions. It does not apply to ministerial approvals — decisions that are required by law when a project meets the applicable standards. This distinction is foundational to the statute.

The IVDC received a ministerial approval because it is a conforming use on I-2 Heavy Industrial land. The county was not exercising discretion when it approved the project; it was performing a ministerial act required by the zoning code. No discretion, no CEQA. The Superior Court affirmed this analysis in February 2026 when it dismissed the city’s complaint as legally insufficient.

The city’s strategy was to argue that the project should have required a CUP — transforming a ministerial approval into a discretionary one, and thereby opening the CEQA door. The court said no. But the attempt itself illustrates the tactic: use the threat of CEQA review to impose delay and cost on a project the opposition cannot defeat on the merits.

The Cost of Manufactured CEQA Exposure

CEQA litigation is not cheap or fast. An Environmental Impact Report for a project the scale of the IVDC could cost several million dollars to prepare. The process takes 18-36 months minimum. Legal challenges to the EIR add additional years and costs. During all of that time, the project cannot break ground, the financing sits idle accumulating carrying costs, and the developer faces the choice of continuing to absorb those costs or abandoning the project.

This is what manufactured CEQA exposure accomplishes even when it ultimately fails in court. It imposes real financial damage during the litigation period. The opposition understands this. The strategy is not primarily about winning the CEQA argument in court — it is about making the cost of proceeding too high for the developer to sustain.

For a $10 billion project with institutional financing, that calculation is different than it would be for a smaller developer. But the principle applies at every scale: CEQA litigation without merit is not environmentalism. It is a financial weapon being deployed against a community that needs this project.

What Legitimate Environmental Review Would Show

The irony of the effort to force CEQA review on the IVDC is that a good-faith environmental analysis would likely reach favorable conclusions for the project. The closed-loop recycled wastewater system eliminates the water consumption concerns that opponents cite. The dedicated substation means grid impacts are not socialized to other ratepayers. The battery storage system improves grid stability. The I-2 industrial site is surrounded by industrial land uses, not residential communities.

The opposition is not pursuing CEQA review because they believe the environmental analysis will validate their concerns. They are pursuing it because the process itself — regardless of the outcome — serves their interests. That is the definition of weaponization.

California needs CEQA reform precisely because this pattern is so well-established and so damaging. Projects that would benefit the communities they are built in — particularly in economically distressed regions that cannot afford to wait for investment — are being delayed and defeated by environmental review processes that have nothing to do with environmental protection. Imperial Valley is paying the price of that failure right now.

Property Rights Are Not Optional: The IVDC and the Rule of Law in California

Property rights are not a privilege granted by government that can be revoked when the project becomes inconvenient. They are legal entitlements — established through zoning designations, protected by statute and constitution, and enforceable in court. The entire system of private investment in physical infrastructure depends on investors being able to rely on those entitlements meaning what they say.

The IVDC site has been zoned I-2 Heavy Industrial for decades. Someone bought I-2 land knowing it was zoned for heavy industrial use. A developer invested in engineering, planning, and permitting for a project that conforms to I-2 standards. The county reviewed the project against those standards and issued a ministerial approval. A court reviewed the legal challenge to that approval and called it legally insufficient.

At each step, the law said the same thing: the project is entitled to proceed. The opposition’s campaign is an effort to find a mechanism — any mechanism — that can defeat that legal entitlement despite the law’s consistent answer.

What Investment Certainty Actually Requires

The argument for protecting by-right development is not primarily ideological. It is functional. California has a serious problem attracting the industrial and commercial investment it needs because the gap between what the law says and what actually happens is too wide. A developer who invests in a site based on its zoning classification and the legal framework governing approvals, only to find that a coordinated opposition campaign can defeat that approval through years of litigation regardless of legal merits, will rationally choose to invest somewhere else.

This is not a threat or a business complaint. It is a description of how capital allocation decisions work. If the expected cost of developing California industrial land — including the legal uncertainty, the litigation risk, and the carrying costs during the appeal period — exceeds the expected return, the capital goes to Arizona, Nevada, or Texas instead. Those states don’t have better land. They have more predictable institutions.

Imperial Valley cannot afford to become the case study that teaches investors California’s industrial land approvals are meaningless. The county’s economic development agenda depends on developers believing that a permitted use on appropriately zoned land will actually be permitted.

The Opposition’s Implicit Argument

The coalition opposing the IVDC does not argue, explicitly, that property rights should not be respected or that by-right approvals should be overrideable by neighbor preference. They argue, instead, that this specific project has specific impacts that require specific review — and that the approval process didn’t adequately account for those impacts.

The court reviewed that argument and called it legally insufficient. The legal framework governing the approval process was followed correctly. The specific impacts the opposition cites — water use, grid impact — are either addressed by the project’s design (the recycled water system, the dedicated substation) or are described in terms that don’t align with the technical facts.

What the opposition’s argument actually requires, stripped of its specifics, is a rule that says: any project large enough to attract organized opposition can be forced into a discretionary review process, regardless of its zoning and regardless of what the law says. That rule does not exist. It should not exist. And the courts have said, clearly, that it doesn’t govern this project.

The Long Game

The rule of law is a long game. Individual decisions get made correctly or incorrectly, and the consequences are often not immediately visible. But the pattern of decisions — whether by-right means by-right, whether ministerial approvals hold, whether vested rights are respected — shapes the investment environment over years and decades.

Imperial County’s ability to attract the next large project, and the one after that, depends on this project’s approval surviving the legal campaign against it. Not just because the IVDC itself matters — though it does — but because what happens to the IVDC tells every future investor something about whether Imperial County is a place where the rule of law holds.

The courts are saying yes. The question is whether the political institutions will follow.