The First District Court of Appeal held the California State Lands Commission’s (“CSLC”) EIR for a project involving the lease of sovereign lands beneath San Francisco Bay for private dredge mining of sand complied with CEQA; however, it partially reversed the trial court’s judgment denying a writ because the record failed to demonstrate CSLC’s compliance with the public trust doctrine. San Francisco Baykeeper, Inc. v. California State Lands Commission (Hanson Marine Operations, Inc., et al., Real Parties In Interest) (1st Dist., Div. 4, 2015) ___ Cal.App.4th ___, 2015WL 7271956, filed 11/18/15.

CEQA Issues

Petitioner Baykeeper unsuccessfully advanced four challenges to CSLC’s EIR and CEQA review process for a 10-year extension of several mineral extraction leases granted to real parties on numerous parcels of sovereign lands lying beneath San Francisco Bay, Suisun Bay, and the Sacramento-San Joaquin River Delta. Baykeeper argued: (1) the EIR’s baseline was unsupported by the record: (2) its analysis of erosion impacts was inadequate and the FEIR should have been recirculated due to the addition of significant new information on the issue; (3) it employed improper criteria for evaluation of mineral resources impacts; and (4) CSLC failed to notify and consult with interested agencies as required by CEQA.

Regarding the baseline issue, the Court upheld CSLC’s use of a five-year average of annual mining volumes as better reflecting existing mining conditions than the rate of extraction in 2007, the year the NOP was released. CSLC found that the quantity of sand mined from the leased sites fluctuated substantially based on changes in demand, economic conditions, capacity, etc., and that use of a 2002-2007 period average as the baseline was actually conservative because the intensity of operations in that period was lower than for the period covered by prior leases and permitted levels. This decision was within CSLC’s discretion and its findings were supported by substantial evidence, including California Geological Survey state-level data and statistics regarding actual and permitted historic lease area mining volumes. Contrary to Baykeeper’s arguments, the FEIR addressed recent (as well as historic) sand mining levels and reasonably explained that use of the unusually low recent levels resulting from the economic downturn would have distorted the analysis.

Regarding the erosion/sedimentation issues, the FEIR found no significant project-specific or cumulative impacts would occur to coastal beaches or the San Francisco Bar from an additional 10 years of mining the lease sites. Supplemental analysis supporting the FEIR’s Master Response (including consideration of two recent unpublished scientific articles and a supplemental modeling study and sediment transport analysis) simply reinforced the DEIR’s conclusions; moreover, because the project’s incremental contribution to any cumulative impact on sediment transport/coastal erosion was found less than significant “a more comprehensive analysis of the cumulative impact of past, present and future mining projects on sediment transport and coastal erosion was not required.” (Citing Guidelines § 15130(a) and City of Long Beach v. Los Angeles Unified School Dist. (2009) 176 Cal.App.4th 889, 909.) Baykeeper’s argument that the FEIR’s conclusions were based on an improper “ratio” theory – finding incremental impacts “relatively insignificant by comparing it to the overall problem of coastal erosion” – lacked merit. While Kings County Farm Bureau v. City of Hanford (1990) 221 Cal.App.3d 692 and its progeny hold a project’s cumulative impact cannot be deemed insignificant solely because its contribution to an existing problem is relatively small, they do not hold that “one additional molecule” necessarily creates a significant cumulative impact. A proper analysis assesses not only whether the cumulative impact is significant, but “whether the proposed project’s incremental effects are cumulatively considerable.” Here, the FEIR’s analysis was neither misleading nor cursory, and “did not employ a misleading ratio to avoid[adequately] addressing the complex issue of sediment erosion.” Further, because the new information in the FEIR did not alter the DEIR’s substantive conclusions about sand mining’s effects on coastal erosion, substantial evidence supported CSLC’s decision not to recirculate the DEIR, and Baykeeper failed to carry its burden to show otherwise.

Regarding the FEIR’s analysis of project impacts on mineral resources, the Court agreed with CSLC staff (and disagreed with Baykeeper) in holding that the purpose of the analysis required by CEQA is “not to assess whether mining would deplete the mined resource, but rather whether the project would interfere with important mineral resource deposit areas that should be conserved for purposes of extraction of the valued mineral and not be lost to an incompatible use.” While the EIR recognized that mining is inherently not a sustainable activity – since it depletes a nonrenewable mineral resource – the proper (and commonly understood) inquiry under Guidelines Appendix G is whether the proposed project would have the adverse effect of limiting access to or limiting the availability of a known mineral resource, which this project would not. In any event, the Court held the Guidelines Appendix G checklist is suggested only, lead agencies have discretion to develop their own significance thresholds, state law and policy support the commonly understood focus of the Appendix G standards as involving accessibility to a known mineral resource, and the deferential substantial evidence standard applies to the scope of an EIR’s analysis.

In disposing of Baykeeper’s final CEQA argument, the Court rejected CSLC’s “substantial compliance” arguments and held “that the appellate record shows that the [C]SLC violated CEQA [notice and consultation] requirements designed to ensure that it consult with affected agencies including the California Coastal Commission and the City of San Francisco.” However, because Baykeeper “fail[ed] to demonstrate that these violations resulted in the omission of pertinent information from the environmental review process[,]” the Court held that it was required to “reject [Baykeeper’s] contention that there was a prejudicial violation of CEQA notice and consultation requirements[.]”

Public Trust Issues

Noting “there is no dispute that the project authorizes the private use of land that is protected by the public trust[,]” the Court framed the issue on appeal as “whether the [C]SLC violated the public trust doctrine by failing to consider whether the sand mining leases constitute a permissible use of public trust property.” In rejecting the CSLC’s “position that, as the public trustee of submerged lands under the Bay, it had plenary authority to approve the mining leases without making any findings under the public trust doctrine[,]” the Court first reviewed the historical legal origins and guiding principles of that doctrine. The public trust doctrine is traceable to Roman law, and the “primary authority elucidating [the doctrine’s] function and purpose” continues to be the U.S. Supreme Court’s decision in Illinois Central Railroad v. Illinois (1892) 146 U.S. 387. Central to the public trust doctrine is that a state’s title to land beneath navigable waters is held in trust for its people so that they may use them for navigation, commerce, and public trust uses (such as fishing, hunting, bathing, swimming, etc.) free from private parties’ obstruction or interference. The state’s trust cannot be abdicated, or alienated, and the concept of public use is flexible to accommodate changing public needs such as preservation of lands for scientific study, open space, habitat, and the like. The state’s duty is “to protect the people’s common heritage of streams, lakes, marshlands, and tidelands, surrendering that right of protection only in rare cases when the abandonment of that right is consistent with purposes of the trust.” Further, the state as trustee has “an affirmative duty to take the public trust into account in the planning and allocation of [trust] resources, and to protect public trust uses whenever feasible.” (QuotingNational Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 441.) “[C]ourts should [thus] ‘look with considerable skepticism upon any governmental conduct which is calculated either to reallocate [trust land] . . . to more restrictive uses or to subject public uses to the self-interest of private parties.’ . . .Trust lands may be devoted to purposes unrelated to the trust if such purposes are incidental to and accommodate trust uses but . . . there are limits on the legislative authority to free use of trust land for nontrust purposes.” (Quoting Zack’s, Inc. v. City of Sausalito (2008) 165 Cal.App.4th 1163, 1176.)

Accordingly, CSLC’s authority to approve the mining leases carried with it the “duty to take the public trust into account . . . and to protect public trust uses whenever feasible.” (QuotingNational Audubon, supra, 33 Cal.3d at 446.) The jointly prepared appellate record failed to demonstrate CSLC fulfilled its duty, as it admittedly made no findings about the project under the public trust doctrine and thus implicitly conceded it failed to consider whether private dredge mining of sand was a proper use of trust property. In rejecting CSLC’s contrary arguments, the Court held private sand mining for commercial profit from lands beneath the Bay is not per se a public trust use (even though it might confer a public benefit), and distinguished the body of law relating to oil and gas extraction from submerged lands. Per the Court: “[A]lthough the Legislature has conferred authority on the [C]SLC to approve sand mining leases, it did not find that sand mining is a public use or an automatically authorized use of trust land.” (Citing Pub. Resources Code, § 6900.)

Moreover, the public trust doctrine applies to sand mining leases – which CSLC’s CEQA analysis conceded would deplete a nonrenewable trust resource – on public lands.

Finally, CSLC did not automatically fulfill its public trust obligations simply by conducting an adequate CEQA review. While case law establishes that compliance with environmental statutes can fulfill an agency’s public trust obligations, CEQA review of a project involving sovereign land does not necessarily do so. The Court pointedly distinguished its earlier decision in Citizens for East Shore Parks v. State Lands Com. (2011) 202 Cal.App.4th 549, 577-578, which “held that when no change is being made to a public trust use and there has been compliance with CEQA, the public trust doctrine does not independently impose an additional impact requirement mandating the consideration of additional project alternatives and mitigation measures in connection with those public trust uses.” In Citizens for East Shore Parks there was no dispute that the maintenance and operation of the marine terminal at issue was a public trust use, whereas in the instant case it was “hotly disputed” whether private sand mining was such a use, “or even a trust consistent use[.]” Unlike in Citizens for East Shore Parks, where the record showed that the CEQA review encompassed consideration of the public trust, here the record did not show that CSLC conducted any analysis of its obligations under the public trust doctrine, and a remand was thus required for that purpose.