Environmental Protection and Information Center v. California Department of Forestry and Fire Protection (July 17, 2008, S140547) __ Cal.4 ___.

The state Incidental Take Permit (the “ITP”) and the Sustained Yield Plan (the “SYP”) approved under the Headwaters Agreement of 1996, which allowed the Pacific Lumber Company (“PLC”) to log old growth redwood forests in Humboldt County, are invalid, the California Supreme Court ruled last week. The Court held the state ITP invalid because it provided “no surprises” assurances that unlawfully limited PLC’s obligation to fully mitigate its impacts on endangered and threatened species. The SYP was invalid for two reasons: First, the California Department of Forestry and Fire Protection (“CDF”) never approved an “identifiable final SYP,” as required by California law. Second, the environmental analysis performed by PLC for the SYP did not examine watershed impacts of logging at a sufficiently detailed level.

In upholding the challenges by the Environmental Protection and Information Center (“EPIC”) and the United Steelworkers of America (“Steelworkers”), the Supreme Court reversed in part the judgment of the Court of Appeal and reinstated the trial court’s interim remedy—which enjoined logging pursuant to any timber harvesting plan (“THP”) approved in reliance on the SYP after June 22, 2003. The Supreme Court remanded the case for reconsideration of the invalid approvals. The trial court now must determine the appropriate procedures for approval of an “adequate, identifiable SYP” that addresses environmental impacts at the individual watershed level, and it must decide whether the unlawful no surprises clauses can be severed from the ITP.

“No Surprises” Assurances Unlawfully Limited Permittee’s Mitigation Obligations

PLC received an ITP under the California Endangered Species Act (“CESA”) in connection with the Habitat Conservation Plan (“HCP”) developed for its property. The ITP and the HCP Implementing Agreement contained clauses that limited in advance the obligation of PLC to mitigate for impacts of its logging activities. In the event of “changed circumstances that were anticipated in the HCP,” PLC would be expected to implement only those mitigation measures prescribed by the HCP, even if the California Department of Fish and Game (“DFG”) determined that additional measures were necessary. Likewise, in the case of “unforeseen circumstances,” DFG would not require additional restrictions or the commitment of additional resources by PLC.

Significantly, the HCP defined “changed circumstances” and “unforeseen circumstances” in terms of the magnitude of the events, without distinguishing between events caused by PLC’s timber harvesting operations and events of natural origin. For example, the HCP defined “fire unforeseen circumstances” as wildfires, including “those originating from timber operations and prescribed burning,” that cover 5,000 acres or less. “Fire unforeseen circumstances” were defined as all such wildfires covering more than 5,000 acres.

As a result, EPIC argued, the no surprises assurances violated DFG’s statutory mandate to ensure that the impacts authorized by an ITP are “fully mitigated,” subject only to the limitation that mitigation measures be “roughly proportional” to the permittee’s impacts on listed species. The Supreme Court agreed, finding that CESA evinced a legislative intent for each landowner to “bear no more—but also no less—than the costs incurred from the impact of its activity on listed species. To the extent that the changed and unforeseen circumstances provisions of the Incidental Take Permit exempt landowners from this obligation, they exceed DFG’s statutory authority under CESA.”

DFG had found that the HCP did not constitute a natural community conservation plan (an “NCCP”) as that term was defined by the Natural Community Conservation Plan Act (the “NCCPA”) in 1999, when the HCP was approved. Because the ITP was issued under CESA and not the NCCPA, the Court did not find it dispositive that the NCCPA was amended in 2002 to add explicit “no surprises” assurances similar to those found in the HCP. In fact, the Court held that the no surprises provisions of the NCCPA supported the conclusion that regulatory assurances were not authorized under CESA. “Where as here the Legislature has established alternative statutory schemes for authorizing and minimizing the taking of endangered species, but has provided a particular benefit to landowners—regulatory assurances—in only one of those schemes, the natural inference is that it did not intend the same assurances to be provided in the other scheme.”

The Court’s ruling appears to limit the use of regulatory assurances under CESA, at least where a state ITP is issued for an HCP that is not also an NCCP. The Court did, however, leave open the possibility that the adaptive management programs contained in the HCP, which are “designed to protect wildlife in response to changing circumstances, may “fulfill [PLC’s] obligation to fully mitigate the impact of its take of listed species,” despite the no surprises assurances. The Court invited the parties to address this issue on remand.

The Contents of the Final, Approved SYP Must Be Clear

The Court also agreed with EPIC and Steelworkers that CDF’s approval of the SYP was invalid because there was “no single, agreed-upon SYP that ha[d] been approved.” An appendix to the Final EIS/EIR for the project purported to identify and incorporate the documents that made up the final SYP. But the appendix referenced documents that had been superseded and therefore “failed to give an accurate picture of the document’s contents at the time the SYP was approved.” Moreover, CDF apparently based its approval of the SYP in part on information provided by PLC after the EIS/EIR was prepared. As a result, “the contents of the . . . SYP were unsettled at the time of its approval.”

The confusion regarding the contents of the SYP meant that the document could not serve as a standard for judging the lawfulness of PLC’s logging activities, nor could it adequately inform the public regarding those activities, the Supreme Court held. “[T]he SYP is intended to be relied upon by Pacific Lumber and CDF and other government agencies in determining whether Pacific Lumber’s logging activities . . . are lawful. . . . Basic confusion about the contents of an unconsolidated SYP scattered over a voluminous record does not allow the public and decision makers to readily know those contents and use the SYP for the purposes for which it is intended.”

Forest Practice Rules Require Analysis of Impacts on Individual Planning Watersheds

The Court also held that the SYP failed to analyze the impact of proposed logging on “individual planning watersheds,” as required by CDF Forest Practice Rules. Instead, PLC used watershed assessment areas (“WAAs”) to conduct its watershed analysis. Each WAA included between seven and forty-five planning watersheds.

Because of the large scale of PLC’s watershed impacts analysis, CDF and other reviewing agencies objected that “potentially significant impacts from [logging activities] in one or more of the smaller subwatersheds” could go undetected. In addition, the large scale of analysis made assessment of cumulative impacts difficult. Yet CDF relied upon this analysis in approving a long-term sustained yield estimate for PLC’s timber harvesting, which estimate is “at the core of” an SYP. That was a mistake, the Court suggested, because the “substantial informational and analytic gap in the analysis of watershed impacts, which directly affect fish and wildlife issues, may also call into question the reliability of the long term sustained yield estimate.”

On remand, PLC must submit an identifiable SYP for approval by CDF. The SYP must include analysis of individual planning watersheds, and CDF must decide whether that analysis is adequate to support the long-term sustained yield estimate contained in the SYP.

The Court Addresses Past Projects and Cumulative Impacts Under CEQA

The Supreme Court rejected several other challenges to the regulatory approvals for the Headwaters Agreement. One of these challenges raised a novel question of law, however, as the Court addressed for the first time the application of the “abuse of discretion” standard of review to the inclusion of past projects in a cumulative impacts analysis under CEQA.

EPIC alleged that the project EIS/EIR failed to analyze cumulative impacts properly because it did not adequately identify past projects, including PLC’s previous logging in the area. The CEQA Guidelines require the analysis of cumulative impacts to include either (1) “A list of past, present, and probable future projects producing related or cumulative impacts;” or (2) “A summary of projections contained in an adopted general plan or related planning document, or in a prior environmental document which has been adopted or certified, which described or evaluated regional or areawide conditions contributing to the cumulative impact.”

DFG and PCL conceded that there was no list of past, present and probable future projects. Instead, they argued that the EIS/EIR used the second approach. Although unable to identify any other document containing the required summary of regional conditions, DFG and PCL argued that the EIS/EIR itself contained analysis that “necessarily entail[ed] consideration of the effects of past projects,” and that this information was equivalent to what would be provided in planning documents.

The Court agreed with EPIC that the EIS/EIR was required to “consider the present project in the context of a realistic historical account of relevant prior activities.” But the Court found that, “[a]lthough such historical context is somewhat muted in the EIS/EIR, it is present to some degree.” For example, the EIS/EIR contained information about the population decline and habitat degradation of CESA-listed species, and it acknowledged, “somewhat obliquely, that past logging practices are at least in part responsible for this loss and degradation.” Accordingly, the Court could not conclude, on the record before it, that “this discussion of the effects of previous logging activity was unreasonable.”