There was substantial California Environmental Quality Act ("CEQA") activity in the Courts of Appeal during the last six months, with eight new decisions summarized in this Update. These decisions covered issues ranging from whether environmental review is required for a Memorandum of Understanding without agency commitment to when a lead agency designation agreement is appropriate under CEQA.

CASE UPDATE

A. Scope of CEQA

1. Union of Medical Marijuana Patients, Inc. v. City of Upland (2016) 245 Cal.App.4th 1265

Key CEQA Point: Whether a particular activity constitutes a project is a question of law. A court, therefore, considers in the first instance whether the public agency’s activity will cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

In 2007, the City of Upland ("City") adopted a municipal ordinance stating that "[n]o medical marijuana dispensary
. . . shall be permitted in any zone within the city," and defining a dispensary as including any "fixed or mobile" facility or location. The City prepared and adopted a negative declaration for this ordinance, which went unchallenged. In 2013, the City adopted another ordinance, which added a new chapter to the municipal code expressly stating that mobile dispensaries "are prohibited" in the City. The 2013 ordinance contained recitals asserting that such facilities were associated with criminal activity and highly likely to "flourish in the City without the adoption of this Ordinance." The Union of Medical Marijuana Patients ("UMMP") filed a petition for writ of mandate, arguing that adoption of the ordinance was a "project" subject to CEQA, which the trial court denied.

The Fourth Appellate District, Division One affirmed, finding that that, as a matter of law, the ordinance is not a project subject to CEQA. The Court reasoned that the 2013 ordinance was nothing more than a ratification of the previous existing ordinance which banned mobile dispensaries. The Court also held that, even if it were to conclude that the 2013 ordinance is not just a restatement of existing law, the ordinance is still not a "project" subject to CEQA review as the environmental impacts cited by UMMP were "based on layers of speculation" (e.g., concerning the existence and number of patients within the City, their usage rates of marijuana and of mobile dispensaries, and the likelihood of their beginning to cultivate marijuana in response to the ordinance) and therefore are too speculative to be deemed reasonably foreseeable.

2. Delaware Tetra Technologies, Inc. v. County of San Bernardino (2016) 247 Cal. App. 4th 352

Key CEQA Point: A Memoranda of Understanding will not require environmental review under CEQA where it does not commit a lead agency to a particular course of action, foreclose alternatives or mitigation measures, or result in environmental impacts.

The project involved a public/private partnership to construct 34 wells on property owned by Cadiz, Inc., pump an average of 50,000 acre-feet of groundwater per year for 50 years, transport that water via pipeline to the Colorado River Aqueduct, and deliver that water to project participants, including the Santa Margarita Water District ("District"). The San Bernardino County ("County") entered into a Memorandum of Understanding ("MOU") with Santa Margarita and the Fenner Valley Mutual Water Company (the project operator) to establish a process for completing a plan for the project. Under the MOU, the parties agreed that a groundwater management, monitoring, and mitigation plan would be developed in connection with the finalization of the project Environmental Impact Report ("EIR") and would govern the operation and management of the project by Fenner Valley. Once completed, the county would need to review and approve the plan.

The County and the District determined the agreement was not subject to CEQA review because the agencies had not yet approved the project. Delaware Tetra Technologies, Inc. and others filed writ petitions, claiming the agreement violated CEQA. Relying primarily on the California Supreme Court’s decision in Save Tara v. City of West Hollywood, the project opponents argued that the MOU was one of several necessary steps in approving the project, and the County was therefore required to perform environmental review prior to approval of the MOU. The trial court concluded the agreement did not commit the County or the Water District to a definite course of action, so it did not constitute an "approval" of a project subject to CEQA.

The trial court held that the County was not required to perform environmental review under CEQA prior to its approval of the MOU. The Court of Appeal for the Fourth Appellate District, Division Three agreed and affirmed the trial court’s judgment. The question before the Court was whether the approval of the MOU by the county committed it to an activity with direct or indirect impacts on the environment. Recognizing that the County retained full discretion to approve or disapprove the project despite executing the MOU, the Court found that the County had not committed itself as the City of West Hollywood had in Save Tara. Further, the Court found that the act of approving the MOU did not exclude the consideration of alternatives or mitigation measures, which are typically part of the environmental review, relying upon the Sixth Appellate District’s opinion in Cedar Fair L.P. v. City of Santa Clara.

B. Exempt From CEQA Review

1. People for Proper Planning v. City of Palm Springs (2016) 247 Cal. App. 4th 640.

Key CEQA Point: Given its variance from Berkeley Hillside, this decision is best viewed as an unusual analysis of a CEQA exemption, and a reminder that courts can be unpredictable.

The City of Palm Springs’ ("City") General Plan designated the minimum and maximum density of residential units allowed in each land use zone. In 2013, the City amended its General Plan to eliminate minimum density requirements for all residential zones. The City’s resolution adopting the amendment provided in part that "the current and past practice of the city… is to consider only the maximum density allowed within each land category and consider and approve lower density projects." The City concluded that this change was exempt from CEQA based on a Class 5 categorical exemption for "minor alterations in land use limitations . . . which do not result in any changes in land use or density." (CEQA Guidelines, § 15305.)

People for Proper Planning ("PPP"), a citizens’ group, filed a petition for writ of mandate and complaint for declaratory and injunctive relief, arguing that the exemption did not apply, and that the amendment was inconsistent with the General Plan and in violation of Government Code section 65863, which prohibits cities and counties from reducing residential densities under some circumstances.

The Fourth Appellate District, Division Two reversed the City’s use of an exemption. The Court rejected the City’s argument that because the lower threshold numbers represented "anticipated" levels of development, the removal of those numbers would not actually change the densities, pointing to the fact that "ecause the Amendment does not retain existing density minimum standards on its face, it apparently results in a change to land density," thus rendering it inconsistent with the text of the exemption." The Court concluded that even if the amendment could fit within the cited categorical exemption, PPP had met its burden to show that the amendment falls within one of the exceptions to the exemption, appearing to apply the fair argument test rather than the test set forth by the Supreme Court last year in Berkeley Hillside Preservation v. City of Berkeley (i.e., holding that the substantial evidence test should be used to determine whether the unusual circumstances exception applies).

C. Negative Declarations

1. Preserve Poway v. City of Poway (2016) 245 Cal.App.4th 560.

Key CEQA Point: CEQA does not require analysis of a project’s social and psychological impact on community character. Rather issues related to these impacts should be decided as part of the political process.

In 2013, the Poway City Council unanimously approved a project aimed to replace a horse boarding facility with twelve homes in the City of Poway ("City"). A mitigated negative declaration ("MND") was prepared to evaluate the potential environmental impacts of the project. The Poway Valley Riders Association and other equestrians concerned with the resulting "impact" on "community character" formed a citizens group ("Preserve Poway") and filed a CEQA action challenging the MND. They argued that an EIR rather than an MND should have been prepared as the Project would have a significant effect on the City’s community character and cause psychological and social impacts to City residents who viewed the horse boarding facility as a long-standing community resource.

The trial court found that most of the issues in the CEQA writ petition could not be pursued at trial for failure to exhaust administrative remedies. Reviewing the issue of community character, the trial court concluded that a fair argument had been made and directed the City to set aside the MND and project approval.

The Fourth Appellate District, Division One reversed the trial court’s decision, focusing on the distinction between physical environmental changes and social or economic impacts, and noting that under CEQA economic and social impacts resulting from a project are not considered significant impacts on the environment. As the Court explained, where "community character" involves aesthetic impacts, CEQA requires adequate analysis and mitigation of such impacts. The Court noted, however, that in this case the "community character" at issue did not involve aesthetic or visual impacts, but "what is pleasing to the psyche" and the residents’ sense of well-being. The Court found that there was no evidence the residential project would be visually out of character with the surrounding land uses because single-family homes could be found to the immediate north, east, and northwest, and concluded that CEQA did not require the City to study the project’s potential psychological and social impacts upon the community character.

2. Joshua Tree Downtown Business Alliance v. County of San Bernardino (June 15, 2016) (E062479) 2016 Cal. App. LEXIS 574.

Key CEQA Point: Dire predictions by nonexperts regarding the consequences of a project do not constitute substantial evidence. While members of the public may provide opinion evidence where special expertise is not required, the interpretation of technical or scientific information requires an expert evaluation and, therefore, public testimony on such issues does not qualify as substantial evidence.

In August 2012, the County of San Bernardino ("County") circulated an initial study and proposed negative declaration for a 9,100-square-foot Dollar General store ("Project") in Joshua Tree. Nearby property owners raised concerns to the County that the Project would be out of character with the area’s family-owned business community. In response the County changed its environmental determination from a negative declaration to a mitigated negative declaration ("MND") and recirculated it in November 2012. Following approval of the Project, the Joshua Tree Downtown Business Alliance ("Alliance") filed a petition for writ of mandate, alleging that the County violated CEQA by failing to analyze the Project’s potential for causing urban decay and blight. The Alliance also alleged that the County violated CEQA by approving a project that was inconsistent with the Joshua Tree Community Plan ("Community Plan").

The trial court concluded that there was substantial evidence to support a fair argument that the Project could cause urban decay, and therefore an EIR was required. It relied chiefly on comments made by Ms. Doyle, a member of the Alliance and an attorney who previously advised the Oregon Department of Justice on land use issues, reasoning that her experience demonstrated sufficient relevant personal observations to constitute substantial evidence under CEQA.

The Fourth Appellate District, Division Two reversed the trial court with respect to the urban decay claim, holding that an EIR was not required because while the Project may have potential economic impacts, there was no evidence that these impacts may cause reasonably foreseeable indirect environmental impacts. The Court rejected the Alliance’s contention that Ms. Doyle’s opinions should have been considered substantial evidence, explaining that Ms. Doyle was not an economist and was therefore, not qualified to opine on the Project’s economic impacts because her conclusions were speculative and had no factual basis.

The Court also rejected the Alliance’s argument that the Project required an EIR because it was inconsistent with the Community Plan, and declined Alliance’s request to view this as a CEQA issue that should be reviewed under the fair argument standard. Instead, the Court applied the usual standard for a claim of inconsistency with a land use plan—abuse of discretion—and found that the County had not abused its discretion.

D. Environmental Impact Reports

1. Center for Biological Diversity v. County of San Bernardino (2016) 247 Cal. App. 4th 326.

Key CEQA Point: With public/private partnership projects, the agency that will serve as the lead agency for purposes of environmental review may be (1) the public agency that is part of the public/private partnership, or (2) the public agency with the greatest responsibility for supervising or approving the project as a whole. All that is required to support a lead agency designation agreement under CEQA is two agencies with a substantial claim to serve as lead agency.

This is a companion case to Delaware Tetra Technologies, Inc. v. County of San Bernardino (discussed above) involving one of six challenges to the Cadiz water project, a public-private partnership seeking to pump and beneficially use groundwater from an aquifer in the Mojave Desert located in San Bernardino County. The Center for Biological Diversity, San Bernardino Valley Audubon Society, and Sierra Club, San Gorgonio Chapter (collectively, "CBD"), and the National Parks Conservation Association ("National Parks") filed a petition for a writ of mandate under CEQA contending that Santa Margarita Water District ("SMWD") was improperly designated as lead agency in a 2011 Memorandum between it and the County of San Bernardino, and that this error so tainted the process that a new EIR was required. The trial court agreed the designation of SMWD as lead agency violated CEQA and that the County should have served as the lead agency, but found the error was not prejudicial.

The Fourth Appellate District, Division Three held that SMWD’s lead agency designation was correct and in compliance with CEQA under the lead agency criteria set forth in the CEQA Guidelines. Noting that the purpose for publishing the opinion was to provide proper guidance on "how a public/private partnership should be analyzed under Guidelines section 15051," the Court stated "if a project will be carried out jointly in a partnership between a public agency and a nongovernmental person or entity, the agency that serves as the lead agency may be (1) the public agency that is part of the public/private partnership, or (2) the public agency with the greatest responsibility for supervising or approving the project as a whole. It then concluded that SMWD was correctly designated as the lead agency for the Project under either prong of this test."

The Court found that there need not be two or more public agencies with equal responsibility over the Project to support a designating agreement under the CEQA Guidelines. Rather, all that is required is for the two agencies to have a substantial claim to be the lead. The Court then concluded that SMWD had at least a substantial claim for serving as the lead agency, and, as a result, it and the County properly entered into the agreement designating SMWD. Finally, the Court rejected CBD’s and National Park’s argument that the lead agency should be the agency that is in the best position to objectively balance the benefits and risks of the Project, concluding that under the CEQA Guidelines the lead agency "need not be free from receiving any benefit from the project, as long as that agency is able to fully and fairly provide the necessary environmental information required by CEQA’s procedures."

2. Spring Valley Lake Assn. v. City of Victorville (2016) 248 Cal. App. 4th 91.

Key CEQA Point: A Court is likely to view extensive revisions to a draft EIR as new information requiring recirculation.

Spring Valley Lake Association ("Spring Valley") challenged the construction of an approximately 215,000 square foot commercial retail development ("Project") in the City of Victorville ("City"), which included an approximately 185,000 square foot Wal-Mart store. The challenge included claims under CEQA, state Planning and Zoning Law provisions concerning general plan consistency, and the Subdivision Map Act.

The trial court granted the writ petition in part, holding that (1) the EIR failed to adequately analyze both the project’s impacts on GHG emissions and the project’s consistency with the general plan’s on-site electricity generation requirement, and (2) there was insufficient evidence to support a finding that the project’s parcel map and zone change were consistent with the general plan’s on-site electricity generation requirement. It, however, rejected Spring Valley’s claims that the City violated CEQA by failing to recirculate the EIR after revising the EIR’s analysis of numerous project impacts; and that the City violated the Subdivision Map Act by not making all of the findings specified in Government Code section 66474. Both Spring Valley and the real party in interest, Wal-Mart Stores, Inc. ("Wal-Mart") appealed.

In its opinion, the Fourth Appellate District, Division One affirmed in part and reversed in part, rejecting all the claims raised by Wal-Mart’s appeal, but finding merit in several of the Association’s cross-appeal arguments. A policy in the City’s General Plan required that new construction be 15% more efficient than 2008 Title 24 standards. The Court found that there was insufficient, as well as conflicting, evidence that the Project could meet that standard. According to the Court, the lack of evidence for those two General Plan requirements affected the EIR analysis of impacts attributable to greenhouse gas emissions and air quality.

Finally, the Court held that the City’s revisions constituted "significant new information" requiring recirculation of portions of the Draft EIR. First, the City added information to the Final EIR analyzing the project’s consistency with General Plan air quality policies that had inadvertently been omitted from the Draft EIR. Noting that the public did not have a meaningful opportunity to comment on this information, the Court found this information disclosed a substantial adverse effect, and therefore triggered the obligation to recirculate the draft EIR. Second, after the City circulated the draft EIR, the applicant substantially revised the Project’s storm water management plan. Although no new impacts were identified, the Final EIR included 350-pages of new water quality and hydrology analysis. The Court held that this new information triggered the duty to recirculate. As the Court reasoned: "Given their breadth, complexity, and purpose, the revisions to the hydrology and water quality analysis deprived the public of a meaningful opportunity to comment on an ostensibly feasible way to mitigate a substantial adverse environmental effect."

3. Ukiah Citizens for Safety First v. City of Ukiah (2016) 248 Cal. App. 4th 256.

Key CEQA Point: Addenda can only be used to clarify, amplify, or make insignificant modifications to an already adequate EIR.

In 2011 Costco applied for a use permit and site rezone to allow construction of a 148,000 square-foot retail facility in the City of Ukiah ("City"). In December 2013 and January 2014, the City adopted the necessary rezoning legislation, certified the EIR, and adopted a statement of overriding considerations concerning traffic impacts. Ukiah Citizens for Safety First ("UCSF"), a local citizens group, filed suit to challenge the EIR in Mendocino County Superior Court. Shortly after the suit was filed, the Third Appellate District issued it opinion in California Clean Energy Committee v. City of Woodland ("CCEC"), which revived the use of Appendix F in the CEQA Guidelines concerning the evaluation of a project’s energy impacts. The City concluded that the CCEC decision required a more detailed discussion of energy use than was previously understood at the time the EIR was certified, and thereafter prepared an addendum and lodged it with the trial court in an effort to satisfy the onerous standard articulated in CCEC. The trial court considered the addendum, and found in favor of the City and denied UCSF’s writ petition.

In a partially published opinion the First Appellate District, Division Three, reversed in part the trial court’s judgment, holding that the EIR’s energy analysis was insufficient, failing to meet the standard set forth in CCEC. With respected to the City’s belated attempt to correct the deficiency with an addendum, the Court found that the trial court erred in considering the addendum as it was not part of the administrative record and could not be considered in deciding whether the City abused its discretion in certifying the EIR. The Court also found that an addendum cannot cure the prior approval of an inadequate EIR.

4. Bay Area Citizens v. Association of Bay Area Governments (June 30, 2016) (A143058) 2016 Cal. App. LEXIS 531

Key CEQA Point: MPOs may not rely on emissions reductions expected from pre-existing statewide mandates in order to meet regional greenhouse gas emissions targets under SB 375.

Plan Bay Area ("Project") is the regional transportation plan and sustainable communities strategy for the nine-county Bay Area region, adopted by the Bay Area Metropolitan Transportation Commission ("MTC") and the Association of Bay Area Governments ("ABAG") (collectively, "Agencies") pursuant to SB 375. Under SB 375, the California Air Resources Board ("Board") is required to provide greenhouse gas emissions reduction targets to each region. Each regional metropolitan planning organization ("MPO") must then prepare a sustainable communities strategy to meet those targets. The Agencies prepared and approved the Project, which established a regional plan for reducing greenhouse gas emissions.

Bay Area Citizens ("Citizens") filed a petition challenging certification of the EIR for the Project under CEQA, contending that the Agencies failed to consider greenhouse gas emission reductions expected from existing statewide mandates, such as clean car and low carbon fuel standards. Due to this omission, Citizens contended that the Agencies unnecessarily imposed "draconian" high-density land use patterns to reduce vehicle miles traveled ("VMT") to satisfy the Board’s greenhouse gas emissions targets. The trial court rejected Citizens’ argument, and denied the writ petition.

In affirming the trial, the Fifth Appellate District looked to the plain language and purpose of SB 375 and found that because the emissions reductions from the statewide mandates are projected to dwarf those achieved by SB 375, the whole statute would be superfluous if the MPOs could rely upon expected reductions from preexisting initiatives. Having found that the Agencies properly interpreted the requirements of SB 375, the Court rejected Citizens’ related arguments challenging the Plan objectives, as well as the analysis of alternatives.

As to Citizens’ challenge to the assessment of the No Project Alternative, the Court found that, while CEQA "normally" requires use of conditions existing at the time the notice of preparation is filed, this was not a normal situation. SB 375 required the Agencies to develop a plan to achieve the greenhouse gas reduction targets set by the Board, which had used a baseline of 2005. As a result, the Court agreed with the Agencies’ use of a baseline of 2005 in its EIR for analysis of greenhouse gas emissions.

PENDING CALIFORNIA SUPREME COURT CEQA CASES

There are currently five CEQA cases pending at the California Supreme Court. Although oral argument has not been scheduled in four of these cases, Friends of the College of San Mateo Gardens v. San Mateo County Community College Dist. has been argued and submitted for decision. Consequently, we are assured by the end of this year to have further guidance from the Court as to the circumstances under which public agencies must prepare subsequent EIRs when evaluating "changes" to previously-approved projects.

1. Banning Ranch Conservancy v. City of Newport Beach, (Review granted August 19, 2015)

The Supreme Court granted review on the CEQA issue of whether the City was required to identify environmentally sensitive habitat areas—a legal determination under the Coastal Act—in the EIR. The case is fully briefed.

2. Cleveland National Forest Foundation v. San Diego Assn. of Governments (Review granted March 11, 2015)

The Court limited review to a single issue—whether an EIR for a regional transportation plan must include an analysis of the plan’s consistency with the GHG emission reduction goals reflected in Executive Order No. S–3–05 (80% below 1990 levels by the year 2050) in order to comply with CEQA. The case was fully briefed in August 2015.

3. Friends of the Eel River v. North Coast Railroad Authority (Review granted December 10, 2014)

This case includes the following CEQA issues: (1) Does the Interstate Commerce Commission Termination Act ("ICCTA") preempt the application of CEQA to a state agency’s proprietary acts with respect to a state-owned and funded rail line, or is CEQA not preempted in such circumstances under the market participant doctrine (see Town of Atherton v. California High Speed Rail Authority (2014) 228 Cal.App.4th 314)? (2) Does the ICCTA preempt a state agency’s voluntary commitments to comply with CEQA as a condition of receiving state funds for a state-owned rail line and/or leasing state-owned property? The case was fully briefed in April 2015.

4. Sierra Club v. County of Fresno (Review granted October 1, 2014)

This case presents issues concerning the standard and scope of judicial review of an EIR when evaluating claims that an EIR provides insufficient information on an issue. The case was fully briefed in March 2015.

5. Friends of the College of San Mateo Gardens v. San Mateo County Community College Dist. (Review granted January 1, 2014)

The Supreme Court granted review to consider the circumstances under which public agencies must prepare subsequent EIRs when evaluating "changes" to previously-approved projects, and the level of deference these agency decisions should receive from the courts. In other words, is an agency’s decision reviewed under a substantial evidence standard of review (Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385), or is the decision subject to a threshold determination of whether the modification of the project constitutes a "new project altogether," as a matter of law (Save Our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288). The case has been fully briefed, argued and submitted for decision.