In an opinion filed March 23, and belatedly modified and ordered published on May 25, 2017, the First District Court of Appeal reversed the trial court’s dismissal of a plaintiff environmental group’s (“Friends”) CEQA action against a local air quality district (“District”). (Friends of Outlet Creek v. Mendocino County Air Quality Management District (Grist Creek Aggregates, LLC, et al., Real Parties in Interest) (1st Dist., Div. 1, 2017) ___ Cal.App.5th ___.) Friends’ action challenged District’s 2015 issuance of an “Authority to Construct” to Real Party Grist Creek for asphalt plant-operations on a site used, at various times since 1972, for aggregate and asphalt production. The trial court had sustained District’s and Grist Creek’s demurrer on the ground that CEQA relief was unavailable against a local air district in this context and that Friends’ exclusive remedy was an action under Health and Safety Code § 40864.

In reversing, the Court of Appeal held that: (1) ample precedent supported the availability of a CEQA action against a local air district to challenge a discretionary approval granted by the district; (2) such an action here would be limited to challenging solely the District’s action – the Authority to Construct and related CEQA compliance – and not other (County) approvals for the project or site; and (3) such a CEQA action must here be brought as an administrative mandamus proceeding governed by Code of Civil Procedure § 1094.5. Based on the limited record available on demurrer, the Court declined to evaluate and resolve District’s contention that the Authority to Construct was a ministerial approval exempt from CEQA, leaving resolution of that issue to further proceedings upon remand based on a fully developed record.

Factual and Procedural Background

The County of Mendocino granted land use approvals for aggregate and asphalt production on the relevant site since 1972; it issued a mitigated negative declaration (MND) for one such use permit in 2002. As part of a 2009 General Plan update for which an EIR was prepared, the County changed the site’s designation from Rangeland to Industrial, and rezoned it to conform in 2010, relying on the same EIR. County staff contended the rezoning allowed by right industrial uses that were previously nonconforming and subject to discretionary land use entitlements. No judicial challenges were ever brought to the General Plan update or rezoning.

When Grist Creek acquired the site, after years of reduced production (due primarily to market conditions) and removal of much of the asphalt processing equipment, it sought County’s “Development Review of its proposed continuation and resumption of aggregate and asphalt production at the site.” It initially sought to proceed only with aggregate and concrete production, but later sought the County board’s determination whether resumption of asphalt production would be considered a “new or changed” industrial use under the applicable zoning; the board declared by 2015 resolution it would not be, and that the use was permitted subject to the 2002 use permit conditions. County then issued a notice of exemption (“NOE”) indicating the board’s determination was CEQA-exempt as a ministerial action.

Grist Creek then applied to the District for an Authority to Construct under its air quality rules and regulations. Citing two previous site owners’ uses for aggregate processing, a hot mix asphalt plant and concrete batch plant, and its conclusion that the proposed asphalt facility was part of “a project for which another public agency has already acted as the lead agency in compliance with CEQA,” the District determined no further environmental review was required and issued the Authority to Construct.

Subsequently, after Friends sued it, County’s board rescinded its resolution, stating it wanted to avoid protracted and expensive CEQA litigation, and that its action did not affect any preexisting entitlements. Friends’ lawsuit was dismissed as moot after the trial court sustained County’s demurrer and Friends’ appealed. Meanwhile, Friends administratively appealed the District’s Authority to Construct determination to its hearing board, which denied the appeal in a written decision upholding its air pollution control officer’s determination that District did not need to conduct further environmental review. Friends thereafter filed its action against the District alleging that it violated CEQA and its own rules, and appealed that action’s dismissal after the trial court sustained a demurrer.

The Court of Appeal’s Decision and Analysis

The Court of Appeal cited numerous cases in which an air district had been sued under CEQA in ordinary mandamus actions challenging adopted rules and regulations (i.e., quasi-legislative action), and in other actions challenging individual permit decisions (i.e., quasi-adjudicatory action) like the Authority to Construct. It observed that the relevant cases did not mention Health & Safety Code § 40864 and that no case held or suggested that that statute provided an exclusive remedy for challenging an air district’s actions of any nature. Moreover, the District hearing board’s decision expressly recognized the District’s own rules obligated it to determine whether there has been adequate CEQA compliance. Accordingly, the Court held the District could be sued directly under CEQA without need of invoking Health & Safety Code § 40864.

The Court emphasized, however, that a CEQA lawsuit against the District by Friends would be circumscribed in nature and scope due to the District’s “limited role.” Friends thus could not obtain relief, if any, beyond setting aside the Authority to Construct, could not seek an injunction or declaration against use of the site for aggregate and asphalt production, and could not challenge any of County’s prior approvals, or the adequacy of its prior related CEQA reviews in such an action – to obtain such relief it would have to proceed directly against County. (Left unstated were the obvious facts that CEQA or other challenges to County’s original approvals, 2002 use permit and related MND, 2009 general plan update, and 2010 conforming rezoning were all time barred.)

Further, the action against the District fell within Code of Civil Procedure § 1094.5 and would thus have to proceed as an administrative mandamus action challenging the District’s final decision on the Authority to Construct based on the record made in Friends’ administrative appeal and matters judicially noticeable. The Court noted that such an action will permit Friends to advance claims that District acted in violation of law, i.e., CEQA or its own rules.

The Court also noted that, while the District did not appear to treat its actions as ministerial, the “paucity of the record before [it] in connection with the demurrer” precluded it from evaluating – as an alternative basis for affirming the dismissal – the correctness of Grist Creek’s contention that the District’s action was ministerial and thus exempt from CEQA. Finally, the Court rejected Grist Creek’s contention that Friends had not sufficiently exhausted its internal administrative remedies (holding it did so by means of its timely appeal to District’s hearing board), and agreed with Grist Creek (consistent with its earlier analysis) that the trial court would have no jurisdiction in the action to consider the validity of County’s earlier approvals and environmental reviews, because any such claims would have to be advanced directly against County, not the District.

Summary and Implications of the Decision

This case’s basic message is deceptively simple: a petitioner can sue a local air district directly under CEQA, but can only seek to invalidate the limited entitlement granted by that agency, which in the normal course of events will be a “responsible agency” with approval authority over only a small portion of a project. The case’s unique procedural aspects, however, also serve as good reminders that CEQA litigation can be complex, and of other fundamental CEQA issues and principles that may be implicated when two different agencies are sued under CEQA to challenge aspects of what is (or appears to be) a single project.

For example, this case implicates CEQA principles concerning the scope and finality of completed initial CEQA review, the trigger for and scope of subsequent CEQA review, and the nature and scope of the coordinated responsibilities of lead and responsible agencies in the CEQA review process. Appreciating these basic CEQA principles reveals there is more to the litigation addressed by this short opinion than first meets the eye.

Preliminarily, it must be kept in mind that once a project has received all necessary discretionary approvals, and the lead agency’s CEQA compliance has either survived challenge or the limitations period for challenging its compliance has expired, there is no need to reopen or conduct additional CEQA review unless (due to a changed project or circumstances) the need for another discretionary approval arises, thus triggering subsequent CEQA review. In short, the original CEQA reviews are presumed valid, and are beyond legal challenge.

Sometimes, however, as in this case, the need for a further discretionary approval from the ostensible lead agency – here, the County – is unclear and disputed. It is easy to see how this situation could arise where ongoing or intermittent resource extraction and processing activities at a site have been deemed to embody a vested right, or are conducted under a long-term use permit, but the level of activity has fluctuated significantly in its intensity over the years due to market conditions. Things get more complex under this scenario when an agency that is normally a responsible agency under CEQA, like the local Air District, is called upon to grant a discretionary approval where the lead agency’s CEQA compliance is disputed or unnecessary. Normally CEQA requires responsible agencies to provide input regarding, to consider, and to rely on the lead agency’s CEQA document when acting on the part of the project within their approval authority. A responsible agency’s role is generally limited to commenting on perceived inadequacies in the draft CEQA document within its area of expertise and approval authority, timely suing to challenge the lead agency’s CEQA compliance if still unsatisfied (or being deemed to have waived any challenge), or, where the CEQA process has entirely “broken down” (i.e., the lead agency has failed to conduct CEQA review when required), taking over the role of lead agency itself.

In this case, Friends’ separate litigation against the County – assuming it has been properly pleaded – will likely definitively determine whether the County’s CEQA process actually “broke down” through its approval of a discretionary project in 2015 without CEQA review as a result of improperly determining that it was ministerial. In any event, whether or not the County was correct in ultimately determining it did not need to prepare a new CEQA document because Grist Creek’s proposed activities were already authorized under prior approvals, the District was faced with a distinct project approval request – the Authority to Construct – which, if discretionary under the District’s own rules, required its own CEQA review. Even if the County’s determination was correct, the District may be required to prepare an EIR or other CEQA document for its use in evaluating the potential impacts of its approval. Those issues, and the validity of the District’s CEQA review (if required) on the record before it, may properly be determined in Friends’ action against the District.