Sutter Health cancels plans for new Emeryville hospital

Sutter Health is abandoning plans for a new hospital in Emeryville to replace the aging Alta Bates Hospital in Berkeley. Sutter Health had planned to build a new $1 billion hospital and have it open by 2033. Instead, it plans to open outpatient centers in Emeryville and search elsewhere in the East Bay for a future hospital site. Sutter must close Alta Bates Hospital in Berkeley by 2030 because it doesn't meet the state's seismic safety standards. Last year, SEIU expressed opposition to the plan in Emeryville, claiming that that hospital proposal would lead to fewer jobs than the current Alta Bates Hospital. Now, Sutter Health issued a statement about not building this new hospital. It says in part, quote, the most significant barrier was the lack of a clear and predictable regulatory path. Over two years, we pursued relief under the California Environmental Quality Act, or CEQA. Those efforts did not secure the certainty needed to advance the hospital project, leaving it vulnerable to litigation that could delay construction and new hospital services for years. So let's talk more about what's going on here. We want to bring in Ethan Elkind, who's the director of the climate program at UC Berkeley's Center for Law, Energy and the Environment. Ethan, we appreciate the time. Thank you so much for coming on. There's a lot to kind of wrap our heads around here. So Sutter says that it couldn't find a way to. To avoid lawsuits related to CEQA here, why was that enough, do you think, to sink this Emeryville Hospital project? Well, CEQA creates a lot of uncertainty and delays for big projects like a hospital. For many smaller projects, SEEK was not an issue, but basically the law is designed to give the public information about a project that's proposed in advance so that the public understands what the likely impacts are going to be. Decision makers can then make a decision based on a proposed project or maybe look at alternatives. And if there are significant environmental impacts, then the project developer, in this case it would be Sutter, would have to mitigate those impacts where it's feasible, but in practice, this often opens up project developers to a lot A lot of litigation risk, particularly when you have a motivated opponent. And it sounds like in this case, you have labor union opposition and they are able to enforce the statute as a sort of private enforcement action and create that uncertainty that can make life really difficult for developers. Yeah, opposition, union opposition here seems to be potentially at the heart of why this all sort of fell apart. All right, so Sutter was looking for... Relief from CEQA here. What exactly would that have looked like? Well, we've seen a pretty long history now. It's been a couple decades where certain industry sectors, industry groups go to the legislature and ask for carve-outs from CEQA. And often those are actually relatively uncontroversial. Environmentalists, of course, don't like to see CEQA weakened. But we see all sorts of environmental... Environmentally beneficial projects get special carve outs by the legislature. So infill housing, for example, certain renewable energy facilities. And they were hoping to get accelerated CEQA review through the legislature and other big groups have gotten that in the past. For example, Apple was able to build their headquarters in Cupertino, their new headquarters with expedited CEQA processes. We've seen that with Chase Center, other sports stadia around. state and Sutter was hoping to take advantage of that kind of path as well. But my guess is that opposition from organized labor probably made it impossible for them to get through Sacramento politics on that. Yeah, because Sutter did go to the legislature looking to sort of have the Emeryville project kind of fast-tracked here. There was a lot that happened at the state level, but ultimately a bill moved through the state Senate that would have streamlined CEQA reviews. For the Sutter projects in both Emeryville and one in Santa Clara, but then at the last minute, Emeryville was kind of cut out of the legislation. It's your sense that that may have been because of this opposition from SEIU? Yeah, that's often the case. CEQA is often used by labor unions as a tool to extract concessions, project labor agreements from developers. Now, of course, it's also something that environmentalists use, that community groups use, but it's open to the public to enforce. We don't rely on the government to enforce CEQA. And so labor unions can take advantage of that, particularly if you have a big project like this, there's going to be a lot of impacts, a lot of traffic, noise, impacts to historical resources, and on and on. It was fairly easy to delay a project. Now, I should note, CEQA is not designed to kill projects, but that delay and uncertainty can often be enough, particularly for a marginal project, to get over the finish line. Yeah. So Sutter says they are planning to search for potentially another site to build a new hospital in the East Bay, but wouldn't they potentially run into these same issues, even if you're looking at another location? It depends. I mean, a much smaller project is not going to have as many challenges getting through a CEQA process. I mean, CEQA really affects very large projects like big subdivisions. Freeways, big logging projects, dams, those are the kinds of things where CEQA is often an issue. And so if Sutter is looking for smaller sites, maybe scattered around the East Bay or other parts of the Bay Area, they'll probably have an easier time getting through CEQA. Okay, and then finally there's sort of the question of what all this means for Alta Bates Hospital. In Berkeley, because Sutter says, you know, we know that it has to close by 2030 because it needs to have these these seismic upgrades. Sutter is going to try to get state approval, it sounds like, to keep out debates open while they build a replacement hospital. How likely do you believe it is that they'll get that kind of approval from from the legislature? Well, often with things in Sacramento, it depends on how the interest groups line up and what the sort of coalitions are for and against. And so if there is a powerful coalition, particularly with labor, which is very powerful in the state capitol, if they're on board with keeping Alta Bates open, that'll make that path much easier. If they're opposed, it can be very hard to get your way in Sacramento. All right. Well, thank you so much for helping us better understand all the moving parts here. Ethan Elkind, UC Berkeley Center for Law, Energy, and the Environment. Appreciate the time. Good to see you. Thank you. My pleasure. Thank you.