In a short but significant published opinion filed July 19, 2016, the First District Court of Appeal affirmed the San Francisco County Superior Court’s judgment of dismissal following the sustaining of demurrers (without leave to amend) to a CEQA action as time-barred. Communities for a Better Environment, et al. v. Bay Area Air Quality Management District (Kinder Morgan Material Services, LLC, et al., Real Parties In Interest) (1st Dist., Div. 1, 2016) ____ Cal.App.4th ________, 2016 WL_____________, Case No. A14364. The Court of Appeal held there was no reasonable possibility that plaintiffs (CBE) could amend the mandamus petition to allege their CEQA action was timely filed by virtue of the discovery rule because that rule does not apply where one of the triggering events of CEQA’s statute of limitations has occurred.
The project challenged by CBE’s CEQA petition was the Bay Area Air Quality Management District’s (BAAQMD) approval to alter a Richmond rail-to-truck facility operated by real parties (Kinder Morgan) to transload Bakken crude oil instead of ethanol. BAAQMD determined the approval, given by the July 2013 issuance of a permit called an “Authority to Construct,” was ministerial in nature and therefore exempt from CEQA. It did not file a Notice of Exemption (NOE) – which is merely optional under CEQA – that would have publicly announced this determination. Kinder-Morgan began transloading crude oil in mid-September 2013. In October 2013, at Kinder Morgan’s request, BAAQMD modified two conditions of approval, weakening emissions-monitoring requirements and requiring that the crude oil be transloaded to a different kind of tanker truck. In February 2014, BAAQMD issued a “Permit to Operate” that incorporated these modified conditions.
CBE filed its CEQA writ petition and complaint against BAAQMD and Kinder Morgan’s parent company on March 27, 2014. The petition alleged BAAQMD’s approval of the operational change was not ministerial and required an EIR under the “fair argument” test. Respondents (by means of demurrers and a CCP § 1094 motion for judgment) sought dismissal of the action as time-barred under Public Resources Code § 21167(d) because it was filed more than 180 days after “the date of the public agency’s decision to carry out or approve the project” – i.e., the July 2013 issuance of the Authority to Construct. CBE argued that the discovery rule should apply to postpone accrual of its claim and the running of the statute of limitations until the date it first became aware of Kinder Morgan’s operations through an email on January 31, 2014; it maintained it did not learn, and could not with reasonable diligence have learned, of the project any sooner because BAAQMD gave no public notice of the switch to transloading crude oil and the “entirely enclosed” nature of the operation also made the switch “invisible.”
The trial court dismissed the action as time-barred, finding that section 21167(d)’s 180-day statute of limitations was triggered by the July 2013 Authority to Construct, and that there was no “discovery escape provision or exemption” because (1) CEQA makes the filing of an NOE entirely optional, and (2) section 21167(d)’s application “is not limited to situations ‘where one by observation [can] tell that the [agency’s] approval has been given’ or that a project has commenced.”
The Court of Appeal affirmed. Key takeaways from its opinion include:
- Where a lead agency has determined CEQA does not apply to a project due to an exemption, Public Resources Code § 21167(d) provides three possible dates on which an action to challenge that determination can accrue and thus trigger the running of the applicable CEQA limitations period: (1) the date of filing of an NOE under § 21152(b), which would trigger a 35-day limitations period; (2) if no NOE is filed, the date of the “agency’s decision to carry out or approve the project,” which triggers a 180-day limitations period; and (3) “if a project is undertaken without a formal decision by the … agency,” any action must be filed within 180 days of the “commencement of the project.”
- The “discovery rule,” where applicable either by legislative mandate or judicial decision, is an exception to the general rule that a cause of action accrues when all of its elements are complete, and provides for postponement of accrual of the cause of action and limitations period until the aggrieved plaintiff has actual or constructive notice of the facts constituting the injury.
- Whether the statute of limitations bars an action, or whether the discovery rule applies to delay accrual, are normally questions of fact; however, whether the discovery rule can be applied at all to a particular statute of limitations – here, § 21167(d) – presents a question of law reviewed de novo. Where a trial court dismisses an action without leave to amend, the plaintiff bears the burden of demonstrating a reasonable possibility that amendment could cure the defect.
- In holding as a matter of law that the discovery rule does not apply to Public Resources Code § 21167(d)’s limitations periods, the Court distinguished two cases relied on by CBE: Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist. Agricultural Assn. (1986) 42 Cal.3d 929 (“Concerned Citizens”) and Ventura Foothill Neighbors v. County of Ventura (2014) 232 Cal.App.4th 429 (“Ventura”).
- Concerned Citizens allowed a CEQA challenge based on failure to prepare a supplemental EIR for an amphitheater project to proceed even though filed more than 180 days after construction began; because the project actually being built was substantially different than the project described in the original EIR, “commencement” of “the project described in the EIR and approved by the agency” (which the Supreme Court held was a prerequisite to trigger the limitations period) never actually occurred. Accordingly, the 180-day limitations period never accrued under the statute’s “own terms because the project described in the EIR was never constructed.” Because CBE did not argue that it filed suit within 180 days of either the date of commencement or BAAQMD’s formal decision to approve the project based on any contention that the project substantially changed due to the modified conditions (as opposed to the earlier-approved switch to crude oil that CBE actually challenged), Concerned Citizens did not support its position. In fact, Concerned Citizens (1) held the Legislature determined that commencement of the project described in the EIR provided “constructive notice” sufficient to trigger the limitations period, (2) “did not apply the discovery rule to postpone the triggering of the limitations period,” and (3) held “that an action accrues on the date a plaintiff knew or reasonably should have known of the project only if no statutory triggering date has occurred.” (Emph. added.)
- Similarly, Ventura “did not apply the discovery rule to override the statutory triggering date.” Rather, it involved an EIR and notice of determination (NOD) that analyzed and gave notice of a 75-foot tall building whereas the building actually constructed (without any further public notice or CEQA analysis) was 90 feet tall. It held that because the NOD’s filing only triggered a “30-day statute of limitations for all CEQA challenges to the decision announced in the notice” the NOD “omitting the change in height did not trigger the limitations period.”
- Per the Court of Appeal, the case law confirms, and CBE ultimately conceded, the “general principle [that] … a plaintiff is deemed to have constructive notice of a potential CEQA violation on all three alternative dates of accrual under section 21167(d).” (Citing Stockton Citizens For Sensible Planning v. City of Stockton (2010) 48 Cal.4th 481, 489, 502.) Given that CBE offered no theory on which approval or initiation of the challenged project occurred within 180 days of the filing of its action, it could not possibly amend to show that it lacked constructive notice within that timeframe; its action was therefore properly dismissed with prejudice and “applying the discovery rule … would not postpone accrual of the action.”
The Court of Appeal’s decision provides further important clarity and certainty regarding the operation of CEQA’s short limitations periods, which (along with CEQA’s other procedural rules) are intended to help ensure the extremely prompt and expeditious initiation, prosecution and resolution of CEQA actions. While acknowledging the importance of public participation in the CEQA process, the Court refused to “read an exception” into the statute of limitations to delay triggering its operation as urged by CBE. It observed that “CBE’s arguments about the proper balance between the interests of public participation and of timely litigation are better directed to the Legislature, not this Court.”