In a March 4, 2016 published opinion, the Fourth District Court of Appeal reversed the trial court’s judgment requiring an EIR for a small 12-home rural subdivision project based on the “psychological and social” impacts of the proponent’s related closure of a public horse boarding facility (the “Stock Farm”) which he had operated pursuant to a CUP for 20 years on the 11.6-acre property.  Preserve Poway v. City of Poway (Harry A. Rogers, et al., Real Parties in Interest) (2016) ___ Cal.App.4th ___, 2016 WL 891405.  In addition to its primary holding that psychological, social and economic impacts are not cognizable under CEQA, the Court rendered a few other interesting rulings, including its application of the Supreme Court’s recent “”CEQA-in-reverse” decision (California Building Industry Ass. v. Bay Area Air Quality Management Dist. (2015) 62 Cal.4th 369 (“CBIA”)) in holding that asserted impacts of an existing equestrian events facility (located across the street from the project) on future project residents were also beyond CEQA’s scope.

The facts are simple.  The City of Poway prides itself on its rural “community character,” dubbing itself the “City in the Country.”  For 20 years, Mr. Harry Rogers’ Stock Farm boarded up to 100 horses in this horse-friendly City.  This business was highly valued by the City’s residents and particularly so by members of the Poway Valley Riders Association (“PVRA”), which operates a 12-acre rodeo, polo and equestrian events facility right across the street from the Stock Farm.  So when the City approved Rogers’ proposal to close down the Stock Farm and build 12 houses – mostly on one-acre lots, with enough room for horses and legally permitted under zoning – PVRA and other equestrians concerned with the resulting “impact” on “community character” formed a citizens group (“Preserve Poway”) and filed a CEQA action challenging the City’s Mitigated Negative Declaration (MND) for the project.

While the trial judge reached and rejected all of the administratively-preserved environmental claims raised by Preserve Poway (i.e., concerning alleged public safety impacts and deficient mitigation measures), he granted the requested writ and ruled an EIR was necessary because the Stock Farm’s closure may have a significant impact on the City’s “horse-friendly community character” as the “City in the County.”

That this judgment was fated to be reversed is clearly signaled by the Court of Appeal just a few paragraphs into its 36-page opinion:

“Unlike some CEQA cases, there is no evidence the Project violates zoning or any other land use regulations.  There is also no evidence the Project will have any adverse impact on traffic, noise, or air pollution.  No one contends the Project is an eyesore.  The homes have not even been designed yet.  There is no substantial evidence the Project, as mitigated, will cause erosion or drainage problems.  There is no substantial evidence of any adverse unmitigated ecological effect.  In fact, even if the Stock Farm closes and the homes are built, there will not be any reduction in Poway’s horse population.  The Stock Farm stables about 100 horses now.  If the Project is built, about 90 horses could be kept on the privately owned lots.

The real issue in this case is not what is proposed to be going in (homes with private horse boarding), but what is coming out (the Stock Farm, public horse boarding).  Project opponents essentially contend that because Rogers, a private property owner, obtained a conditional use permit to operate horse stables they have enjoyed using for 20 years, the public has a right under CEQA to prevent Rogers from making some other lawful use of his land.”

As savvy CEQA practitioners will have already surmised, the rest of the Court’s opinion is essentially “commentary” (including the Court’s lengthy recitation of the record testimony of Poway residents regarding their lifestyles and “community character”), but in the interest of completeness (and also capturing and examining some of the Court’s other significant holdings) I will set forth the highlights:

  • Notwithstanding substantial evidence that loss of the Stock Farm’s public horse boarding facilities may impact Poway residents who enjoyed them, such “impacts” – which are psychological, social, and perhaps economic – are not “environmental” impacts within CEQA’s purview. Per the Court:  “Economic or social effects of a project shall not be treated as significant effects on the environment.”  [Citing CEQA Guidelines, § 15131(a).]  “CEQA addresses physical changes in the environment, and under CEQA ‘economic and social changes resulting from a project shall not be treated as significant effects on the environment’.”  (Quoting Friends of Davis v. City of Davis (2000) 83 Cal.App.4th 1004, 1019.)
  • In briefly examining CEQA’s “administrative exhaustion” requirements, the Court held that under Public Resources Code § 21177(c), if one of its members objected to the project at the administrative hearing, an “after-formed” organization can raise in subsequent litigation any issue raised by anyone else at the public hearing – i.e., even issues raised by non-members. It observed that a contrary ruling limiting Preserve Poway to litigating issues administratively raised by its members only (as urged by appellants City and Rogers) “would significantly narrow the issues because, unlike many other speakers at the hearing, [the Preserve Poway member] only obliquely referred to community character . . . .”  Significantly, the Court did not quote the version of the statute’s subdivision (c) which it applied in the case, nor did it note that a materially different version of that statute (signed into law by then-Governor Schwarzenegger in 2010 as part of a CEQA reform bill, SB 1456) was in effect until January 1, 2016, when it was allowed by the Legislature to sunset.  The Court also did not note that the legislative history of the 2010-2015 version of subdivision (c) clearly indicates it was intended to narrow the standing of after-formed organizations in just the manner urged by appellants.  While any legal error by the Court of Appeal in this regard did not affect the result in the case before it – since its reversal of the judgment handed appellants a complete victory on the merits – this portion of its opinion is, in my view, highly questionable and should not uncritically be relied on as precedent in pending cases where the former version of Public Resources Code § 21177(c) is applicable.  (See also Defend Our Waterfront v. California State Lands Commission (2015) 240 Cal.App.4th 570 [discussing but finding it unnecessary to decide this standing issue], and my analysis of that case in “First District Applies CEQA Exhaustion/Standing Rules, Upholds Judgment Rejecting Claim Of Statutory Exemption For Controversial State Lands Commission Land Exchange Agreement,” by Arthur F. Coon, posted September 28, 2015.)
  • Regarding the standard of review: “In reviewing an agency’s decision to adopt an MND, a court (whether at the trial or appellate level) must determine whether there is substantial evidence in the record to support a ‘fair argument’ that a proposed project [even as mitigated] may have a significant effect on the environment.”  Further:  “Whether the evidence establishes a fair argument that a project may result in significant environmental impacts [so as to require preparation of an EIR] is a question of law.”
  • The Court noted that while “community character” is not defined in CEQA or the Guidelines, previously published opinions have discussed it in the context of aesthetic impacts. (I will merely note that the Court’s descriptive discussion of these cases in dicta tends to perpetuate what may be a legally mistaken notion – that CEQA’s required aesthetics analysis extends to purely private views – but that is an issue for another day.)  Nonetheless, in distinguishing true aesthetic impact issues from those the plaintiffs in the case before it were arguing, the Court stated “the community character issue [raised by plaintiffs] here is not a matter of what is pleasing to the eye; it is a matter of what is pleasing to the psyche.”  Such issues of the “residents’ sense of well-being, pleasure, contentment, and values that come from living in the ‘City in the Country’” did not implicate aesthetic impacts and are non-cognizable under CEQA.
  • “The fact there was a heated debate about community character does not make it cognizable under CEQA.” Per the Court:  “More to the point, CEQA does not require an analysis of subjective psychological feelings or social impacts.  [citation]  Rather, CEQA’s overriding and primary goal is to protect the physical environment.”  The Court’s extensive analysis of this point noted that this fundamental limitation on the scope of required analysis renders CEQA in line with NEPA but, interestingly, at odds with New York’s CEQA analogue, which expressly defines the “environment” to include “existing community or neighborhood character.”  Accordingly, “the superior court erred in determining an EIR was required to study the psychological and social impacts discussed at the public hearings and related emails by project opponents in this case.”
  • The trial court also erred by ruling that cognizable “community character” concerns included the project “opponents[‘] voiced concerns that horses, trucks, and horse trailers associated with PVRA’s activities could have a negative impact on the future residential uses in the Project.” Obviously, such arguments are defeated by the Supreme Court’s recent holding in CBIA that “this type of impact is outside CEQA’s scope.”  (For my analysis of CBIA, see “California Supreme Court Holds “CEQA-In-Reverse” Is Not The Norm, Reverses And Remands First District’s Judgment In CBIA v. BAAQMD,” by Arthur F. Coon, posted December 18, 2015.)  Moreover, none of CBIA’s stated exceptions to the “no-CEQA-in-reverse” general rule applied:  there were no significant environmental effects (cumulative or otherwise) that would result from the project, and since the project was not exempt from CEQA “none of the statutory exceptions pertaining to housing apply.”
  • Finally, the Court rendered an interesting holding on a matter of appellate procedure with potentially significant implications for CEQA appellate litigation. It held that because respondent Preserve Poway had not cross-appealed from the judgment, it could not raise error in the trial court’s rulings on fire safety impacts and wetland/biological impact mitigation measures – issues raised by Preserve Poway and expressly reached and rejected by the trial court below – as alternative legal grounds for affirming the judgment finding the MND deficient and requiring an EIR.  In so holding, the Court characterized Code of Civil Procedure § 906 as providing “a limited exception to the rule that a respondent may not urge error” which “is intended to permit a respondent to assert a legal theory that will result in affirmance of the judgment notwithstanding appellant’s contentions.”  The CEQA case on which it relied in holding Preserve Poway had “forfeited” the fire safety and mitigation issues on appeal was a “severance” remedy case, Anderson First Coalition v. City of Anderson (2005) 130 Cal.App.4th 1173.  There, a partial or limited writ remedy was granted, allowing a Wal-Mart shopping center project to proceed in part; the Court “severed” the gas station component of the project and required further CEQA analysis of its impacts, while allowing the rest of the project (which had been adequately analyzed) to proceed separately.  Relying on the Anderson First case and other, non-CEQA authorities, the Court essentially treated the judgment finding the MND deficient as consisting of separate “portions” and apparently limiting the ultimately required remedy to an EIR focused solely on “community character” impacts.
  • The Court reasoned: “[H]ere, absent a cross-appeal, Preserve [Poway] cannot appeal from adverse determinations on fire safety and wetlands mitigation that involve different portions of the judgment from which appellants have appealed.  The judgment states, “For the reasons stated in the Minute Order, the Petition for Writ of Mandate is granted as to the issue of community character.”  Even if we were to consider the merits of Preserve’s assertions and determine the trial court erred in denying the petition for writ of mandate as to the issues of public safety and mitigation measures, the judgment would still be reversed “as to the issue of community character” for the reasons already stated.  Thus, the exception in Code of Civil Procedure Section 906 does not apply to the issues Preserve seeks to raise.”
  • This interpretation of Code of Civil Procedure § 906 as applied in CEQA cases challenging negative declarations seems somewhat unusual as – absent a severance situation – the final judgment is usually viewed as a “zero-sum” result, i.e., the MND is either good or bad, the project approvals are either upheld or set aside, and if an MND is deficient the preparation of an EIR, potentially covering all issues in a fresh process, is required. Although reform of CEQA’s remedial provisions is certainly warranted, it is unclear how the Court’s holding here squares with existing common practice, and also with the rule that CEQA cases are reviewed de novo on appeal, with no deference paid to the trial court’s determinations.  Perhaps, in the Court of Appeal’s view, the need for a cross-appeal turns on the particular language of the “judgment”  appealed from – and how it parses the issues – in each case.  In any event, in light of the Court’s quite interesting holding, CEQA plaintiffs who prevail in the trial court on only a single or limited number of issues will now certainly want to seriously consider cross-appealing from the “portions” of the judgment disposing of the issues they lost – if they wish to preserve their “victory” on appeal.