Significant Changes Proposed to NEPA Regulations

The Council on Environmental Quality (CEQ) has issued a notice of proposed rulemaking regarding potential changes to the CEQ regulations under the National Environmental Policy Act. The proposed revisions to the CEQ regulations could potentially have far-reaching effects because NEPA requirements are largely defined in the regulations themselves, which have remained essentially unchanged for nearly 40 years. The current deadline to submit comments is July 20, 2018, but it is likely that CEQ will receive and grant requests to extend the comment period. Our Update discussing the potential changes to the regulations, by Bill Malley, Laura Zagar, Chris Chou and Jacob Aronson, is available here.

Court Rejects Interpretation of Medical Marijuana Collective as a “Medical Office” under City’s Zoning Code

The Sixth District Court of Appeal has held that a medical marijuana collective is not a “medical office” as defined in San Jose’s Municipal Code. J. Arthur Properties, II, LLC v. City of San Jose, 21 Cal. App. 5th 480 (2018)

Plaintiffs opened a medical marijuana collective in 2010 at a site zoned Commercial Office. At the time, San Jose’s Municipal Code did not regulate any type of marijuana-specific uses and allowed medical offices in Commercial Office zoning areas. The City Council amended the Municipal Code in 2014 to regulate and permit medical marijuana uses in certain industrial zoning area but not in Commercial Office areas. Plaintiffs received a compliance order in 2014 stating that medical marijuana collectives were not permitted in Commercial Office zoning areas, effectively requiring them to discontinue their business at the site.

Plaintiffs sued, contending that their marijuana collective should continue to be allowed as a legal, nonconforming use. The Sixth District Court of Appeal disagreed. San Jose’s Municipal Code defines medical office as “offices of doctors, dentists, chiropractors, physical therapists, acupuncturists, optometrists, and similar health related occupations, where patients visit on a daily basis.” Plaintiffs argued that medical marijuana collectives should be considered medical offices because they provide a medical and health-related service. The court declined this broad interpretation, observing that medical marijuana collectives did not fall under any of the enumerated uses listed in the definition and that a medical marijuana collective is not a “similar health related occupation.” Emphasizing that the enumerated uses typically involve the on-site treatment of patients by a physician or other professional, the court found no evidence that medical marijuana collectives provided a similar service. Instead, “members of collectives are patients of the physicians who prescribed marijuana.”

Accordingly, the court held that the collective had never been a permitted use to begin with and hence could not be a legal nonconforming use.


Another San Francisco Ordinance Falls To The Ellis Act

Once again, the City and County of San Francisco has been found to have exceeded the limits of its authority under the Ellis Act in its efforts to deter conversion of residential rental units. Small Property Owners of San Francisco Institute v. City and County of San Francisco, 22 Cal. App. 5th 77 (2018).

The Ellis Act prohibits local governments from “compel[ling] the owner of any residential real property to offer, or to continue to offer accommodations in the property for rent or lease.” (Gov’t Code § 7060(a).)  Courts have held that the Ellis Act completely occupies the field of substantive eviction controls over landlords who withdraw units from the market and prohibits local ordinances that penalize the exercise of rights established by the statute.

The ordinance challenged in this case modified the City’s Planning Code to permit enlargement, alteration or reconstruction of nonconforming residential units in zoning districts where residential use was principally permitted, but imposed a 10-year waiting period for units that had been the subject of a “no fault” eviction. Small Property Owners of San Francisco Institute (“SPOSFI”) sued, claiming that the imposition of a 10-year waiting period penalized the exercise of the right to exit the rental business and therefore conflicted with and was preempted by the Ellis Act.

The City argued (1) SPOSFI could not state a facial challenge to the Ordinance; and (2) the imposition of the 10-year waiting period fell within the City’s authority to regulate land use and mitigate impacts on displaced tenants.

The court rejected both arguments. It found that SPOSFI did state a facial challenge to the Ordinance because, in every case where a property owner exercised its Ellis Act rights, the property owner had a locally imposed legal barrier of a 10-year waiting period to make alterations, and it did not matter that the waiting period occurred after the eviction rather than before. The court also held that the complete prohibition of alteration of a nonconforming unit for 10 years reached beyond regulating the particulars of a property owner’s proposed alterations and yet did not help displaced tenants — it therefore constituted an undue burden on the exercise of Ellis Act rights in violation of the Act.

School Fees for Apartment Buildings Not Limited to Square Footage of Individual Units

School impact fees for an apartment complex must be calculated based on the square footage of both the individual units and other space within the interior of the buildings, such as hallways and elevator shafts. 1901 First Street Owner v. Tustin Unified School District, 21 Cal. App. 5th 1186 (2018).

School impact fees under Government Code section 65995 are based on “assessable space,” defined as “all of the square footage within the perimeter of a residential structure, not including any carport, covered or uncovered walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area.” (§ 65995(b)(1).) This square footage is to be “calculated by the building department of the city or county issuing the building permit, in accordance with the standard practice of that city or county in calculating structural perimeters.” (Id.)

The City of Tustin calculated the square footage of an apartment building owned by 1901 First Street using a “net rentable” method — the City’s standard practice at that time — which included the square footage of the individual apartment units but excluded everything else in the building. The school district objected to this method, contending that the statute required all space within the perimeter of the building to be included. The City then revised its square footage calculation based on the perimeter of the building, which resulted in an increase in the fee of over $238,000. First Street sued to recover the difference.

First Street’s principal argument was that, in the case of apartment buildings, the area of a “residential structure” was limited to the apartments themselves, pointing to the exclusions in section 65995(b)(1) for “any carport, covered or uncovered walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area.” The court found that none of these exclusions applied to areas within the interior of apartment structures, such as lounge areas, recreation rooms, indoor pools, elevator shafts, mechanical rooms and the like. The only potentially applicable exclusion, the court said, was for walkways. It concluded, however, that the statute used the term walkway “in the sense of an external walking path” not in the sense of an internal hallway, reasoning that the other items in the list—such as carports, garages and patios—were typically located at or near the periphery of a residential structure, and that the Legislature had specified these exceptions to make it clear that these peripheral areas were not intended to be included as assessable space.

First Street also argued that the City’s standard practice of calculating net rentable space should govern, relying on the provision in section 65995(b)(1) that “the square footage within the perimeter of a residential structure shall be calculated by the building department of the city . . .  in accordance with the standard practice of that city . . . in calculating structural perimeters.” (Emphasis added.) The court disagreed, concluding that the “standard practice” referred to in the statute was specifically the standard practice of calculating the square footage “within the perimeter of a residential structure,” which had to comply with section 65995(b)(1).

First Street’s final argument was that the City’s decision to change its method of calculating assessable space violated First Street’s vested rights to proceed in accordance with the rules, regulations and ordinances in effect at the time of the approval of its vesting tentative map. The court rejected this argument, citing Government Code section 66498.6(b), which states that approval of a vesting tentative map “does not grant local agencies the option to disregard any state or federal laws, regulations, or policies.” The City’s standard practice, the court stated, was not in compliance with state law; hence the City could adopt a new rule implementing the statutory mandate without violating any vested rights.

Homeowners Association Land Use Approval Process Is Protected Activity Under Anti-SLAPP Statute

The California Court of Appeal for the Fourth District has determined that the actions of a homeowners association undertaken in accordance with its land use approval process are protected activities in furtherance of free speech under California’s anti-SLAPP statute. Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Association, 19 Cal. App. 5th 399 (2018)

Background. Two developers proposed a joint project to build residential housing units for senior citizens on property near Rancho Santa Fe, California. Because the project would exceed local density restrictions, the developers sought approvals from both the County of San Diego and the Rancho Santa Fe Association. Initially, the association expressed support for the development. But that changed following an association meeting at which community members expressed opposition to the project. Following the meeting, the association sent communications to the county recommending the county follow current zoning requirements until the association determined whether it would approve the project.

After the developers failed to secure the necessary approvals, they filed suit against the association asserting nine causes of action alleging violations of the Common Interest Development Open Meeting Act, breach of fiduciary duties, fraud, and interference with business relations. While the complaint separated these theories into separate causes of action, the crucial allegations common to each were that the association initially expressed to the developers that it supported the project; the association refused the developers’ request to reschedule an “informational public meeting” to discuss the project; the meeting agenda did not adequately describe the meeting; and the association improperly influenced the county to reject the project.

In response, the association filed a special motion to strike all nine causes of action under California’s anti-SLAPP statute, Code of Civil Procedure § 425.16. The trial court granted the association’s motion as to eight causes of action, but denied the motion as to the cause of action for violations of the Open Meeting Act. The trial court ruled that the association’s alleged activities were not protected under sections 425.16(e)(1) or (2) of the Act as activities occurring during an “official proceeding.”

The Court of Appeal’s Decision. The court of appeal held that the trial court erred in finding the association’s alleged violations of the Open Meeting Act were not based on protected conduct in furtherance of free speech, and upheld the trial court’s rulings striking the developers’ other claims.

Application of the anti-SLAPP statute requires a two-step analysis. First the defendant must demonstrate that the cause of action arises from protected activity. If the defendant does so, the burden then shifts to the plaintiff to demonstrate that it is likely to prevail on its claims.

Regarding the Open Meeting Act cause of action, asserted by only one of the developers, the court concluded that it was unclear whether the association’s activities should qualify as “official” governmental actions under the statute. The court held, however, that the anti-SLAPP statute applied because the activities complained of—communicating with project applicants, setting agendas, and sending emails and letters—were all within the quasi-governmental responsibilities of the association. As a result, the association’s actions fell within the broader protections of section 425.16(e)(4) as “conduct in furtherance of the exercise the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” Under the second prong, the court held that the developer could not demonstrate a probability of success on the merits because it was not a member of the association and therefore lacked standing to seek relief under the Open Meeting Act.

For the remaining causes of action based on the association’s alleged breach of fiduciary duties, fraud, and interference with business relations, the court held that the crux of these causes of action was the same as the set of allegations giving rise to the Open Meeting Act cause of action. Thus, these causes of action also arose from protected activities. And because the developers did not show they could prevail on the merits of those claims, the trial court did not err by striking them.

Conclusion. While the court acknowledged that the case presented a “close question as to the applicability” of the anti-SLAPP statute, it broadly held that that the association’s activities concerning property entitlements “are matters of public interest” and therefore are protected activities in furtherance of free speech. The court did not suggest any limitations or provide any guidance as to how broad a segment of the public must be affected for the challenged activities to be considered as in the public interest.


Court Gives Green Light to Referendum of Ordinance Adopted to Conform Zoning With General Plan

A referendum requiring either the rejection of an enacted zoning ordinance or submission to the voters that would leave in place zoning inconsistent with a general plan does not violate Gov’t Code Section 65860, according to the court’s decision in Save Lafayette v. City of Lafayette, 20 Cal. App. 5th 657 (2018).

The City of Lafayette amended its general plan to designate a parcel residential in anticipation of a residential development project. After the general plan amendment became effective, the city enacted a zoning ordinance to conform the parcel’s zoning with the general plan. The plaintiffs, Save Lafayette, subsequently collected signatures and properly filed a referendum requesting the city to either prevent the enacted zoning ordinance from taking effect or submit it to a vote.

The city declined either option, asserting that preventing the ordinance from taking effect or submitting it to voters would violate Gov’t Code Section 65860, resulting in zoning inconsistent with the city’s general plan. The city defended its decision by relying on deBottari v. City Council, a key case decided in 1985 in which the court held that the City of Norco correctly refused to certify a referendum that would have rejected a zoning ordinance that was amended to be consistent with the general plan.

The court disagreed with this characterization. Relying on the recently-decided City of Morgan Hill v. Bushey, the court held that the referendum would not violate Section 65860 because it did not seek to enact new zoning inconsistent with the general plan. At most, the referendum would preserve the existing zoning designation on the parcel, which had become inconsistent because of the recent amendment to the general plan.

The court acknowledged that if instead an initiative was proposed to change the zoning to a designation inconsistent with the general plan, that this would violate Section 65860. This was not the case here; the referendum could lead to the rejection of the new zoning ordinance, but it did not propose to enact zoning inconsistent with the general plan. While the referendum amounted to a challenge to the city’s choice of zoning, it did not further constrain the city’s ability to enact another suitable zoning designation.

The California Supreme Court recently granted review of Bushey to address the split in authority among the courts of appeal. The case summary on the court’s web site describes the issue presented as follows: “Can the electorate use the referendum process to challenge a municipality’s zoning designation for an area, which was changed to conform to the municipality’s amended general plan, when the result of the referendum – if successful – would leave intact the existing zoning designation that does not conform to the amended general plan?”

The court’s review should settle whether a referendum that seeks to overturn a new zoning ordinance violates Section 65860 if it leaves in place zoning inconsistent with a general plan.

EPA Delays Applicability of Clean Water Rule While Challenges to Rule Proceed in District Courts

As reported in our prior Update, in a decision issued on January 22, the U.S. Supreme Court ruled in National Association of Manufacturers v. Department of Defense, 138 S. Ct. 617, that challenges to the Obama administration’s 2015 Clean Water Rule must be brought in federal district courts, rather than directly in the federal courts of appeals. The Court’s decision will likely prolong the ongoing litigation over the validity of the Rule.

Shortly after the Court’s decision, the Trump administration delayed the Rule’s applicability date for two years while it works on rulemakings to rescind and replace the Rule. Continue Reading

Clean Water Act Permit May Be Required for Pollution Discharged Indirectly into Navigable Waters

A Clean Water Act permit is required for discharging wastewater from injection wells into groundwater where wastewater is “fairly traceable” to navigable waters, the U.S. Court of Appeals for the Ninth Circuit held in Hawai’i Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018). Continue Reading

Clean Water Act Requires Permit for Pollution Discharges from Oyster Hatchery’s Pipes

The Clean Water Act requires a permit to discharge pollutants through pipes, ditches, and channels from an oyster hatchery, even though the facility would not be subject to the Act’s permitting requirements as a “concentrated aquatic animal production facility,” the U.S. Court of Appeals for the Ninth Circuit held in Olympic Forest Coalition v. Coast Seafoods Co., 884 F.3d 901 (9th Cir. 2018). Continue Reading

City’s Bifurcated Procedure For Appealing Approval of Entitlements Separately From CEQA Determinations Upheld

The Fourth District Court of Appeal upheld a mitigated negative declaration where the project opponent correctly appealed the approval of entitlements but failed to properly appeal the CEQA determination under the City of San Diego’s bifurcated appeals process. Clews Land & Livestock, LLC v. City of San Diego, 19 Cal. App. 5th 161 (2017).

A city hearing officer approved permits and adopted a mitigated negative declaration for development of a private school on Clews Ranch Road, adjacent to  a horse ranch owned by Clews Land & Livestock.  Under the city code the entitlement approvals had to be appealed to the planning commission, and the CEQA determination to the city council, both within 10 days after the hearing officer’s decision.

Clews Land appealed both the project entitlements and CEQA determination to the planning commission. After the planning commission upheld the project approval, the project opponent appealed the hearing officer’s CEQA determination to the city council. By then, 10 days had elapsed and the city council refused to hear the appeal, citing its untimeliness.

Clews Land filed suit and the trial court upheld the city’s actions. On appeal, the court agreed with the trial court that Clews Land failed to exhaust its administrative remedies and rejected the claim that the city’s bifurcated appeal process violated CEQA. The hearing officer was the “decision making body” for the project, with authority under the city code to approve the permits and to comply with CEQA by adopting or certifying the appropriate environmental document. And under the city code, all CEQA determinations not made by the city council had to be appealed directly to the city council.

Although the court had concluded Clews Land had failed to exhaust administrative remedies, it nevertheless addressed its challenges to the mitigated negative declaration. First, the court was generally dismissive of the claim that the project would have a significant impact on fire hazards in the area. The court found that neither the project opponent nor their expert, made a fair argument as to why the project would significantly increase fire hazards. The expert’s questions and comments were general in nature and did not establish a nexus to the project. Furthermore, that the project was located in a severe fire hazard zone was, on its own, insufficient to establish a significant impact: CEQA requires consideration of a project’s impact on the existing environment, not the environment’s impact on the project.

The court also quickly dismissed claims of impacts on traffic. The project opponent’s lay testimony that Clews Ranch Road could not support both the horse ranch and the school was insufficient because no factual basis was offered for this conclusion. The court observed that Clews Ranch Road was 20 feet wide, only 1,650 feet long, and had historically supported traffic to and from the large commercial ranch without incident.

In regards to noise impacts, Clews Land alleged that construction of the school and school activities could frighten horses and disrupt ranch operations. The court was not persuaded because the project was located near existing sources of noise, a busy highway and the large horse ranch. Furthermore, the court explained, the particular noise impacts on the horse ranch are not relevant under CEQA, which requires analysis of a project’s impact on the environment, not on particular persons or the operation of a nearby business.

The court also found no issue with the addition of the school’s shuttle bus plan and a condition that the school be closed on red flag fire warning days, after the mitigated negative declaration was circulated. These conditions of approval, the court concluded, were voluntary and therefore did not constitute mitigation measures requiring recirculation of the mitigated negative declaration.