Seven-Year Extension of Diablo Canyon Lease Held Exempt from CEQA

A court of appeal has rejected CEQA and public trust challenges to a State Lands Commission lease extension allowing the Diablo Canyon nuclear power plant to continue operating through 2025.  World Business Academy v. California State Lands Commission, 24 Cal. App. 4th 476 (2018).

Pacific Gas & Electric Company plans to cease operating Diablo Canyon in 2025, when the plant’s federal licenses will expire.  The plant’s cooling water intake and discharge structures are on state-owned submerged and tidal lands, for which the Commission had issued leases to PG&E expiring in 2018 and 2019.  The Commission granted PG&E a consolidated lease extension through 2025, relying on CEQA’s categorical exemption for continued operation of existing facilities.

CEQA’s categorical exemptions are subject to several exceptions that can force a lead agency to prepare a negative declaration or an environmental impact report.  The “unusual circumstances” exception applies “where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.”  Here, Diablo Canyon opponents argued that continued operation of the state’s last nuclear power plant was rife with unusual circumstances that could cause significant environmental effects.

To show that the unusual circumstances exception applies, normally a challenger must show both:  1) unusual circumstances; and 2) a reasonable possibility of a significant environmental effect due to those unusual circumstances.  Here, the Commission had made no finding regarding unusual circumstances.  With no finding before it, the court of appeal elected to assume unusual circumstances did exist, and then proceeded to the second half of the test:  whether there was a fair argument that the lease extension would cause significant environmental impacts.

The court began by holding that the baseline for its analysis consisted of existing operations under the lease.   In so doing, the court followed an earlier case (North Coast Rivers Alliance v. Westlands Water District, 227 Cal. App. 4th 832 (2014)) that applied the same rule with respect to Central Valley Project water contract renewals.

The court then reviewed each factor the challenger claimed raised a fair argument of significant environmental effects — Diablo Canyon’s size, location, impacts on human health and marine life, fuel rod storage, reactor embrittlement, risks from seismic events and terror attacks, and status as the state’s last remaining nuclear plant — and found that none of these conditions would be changed by the lease extension.  Because there was no fair argument of significant environmental effects from the extension, the court held the Commission did not violate CEQA.

Finally, the court rejected the challenger’s claim that the lease renewal was inconsistent with the public trust, holding that the Commission’s balancing “of the public trust rights to navigation, fisheries, and environmental protection against the public need for efficient electrical production” was not arbitrary, capricious, or procedurally irregular.

The opinion in this case is instructive in two respects.  First, it reinforces precedent holding that however damaging an existing environmental condition is alleged to be, that condition is still the baseline under CEQA, and only a project-caused worsening of that condition is a CEQA concern.  Second, the case is a reminder that if the lead agency fails to make findings supporting the conclusion that a proposed project involves no unusual circumstances, the court may assume the project does involve unusual circumstances.  The court will then proceed to ask whether project opponents have raised a fair argument that the project will cause significant environmental effects.  Although project opponents often cannot meet even this low threshold, lead agencies relying on potentially controversial categorical exemptions should minimize this risk by making findings regarding unusual circumstances.

Federal Appeals Court Rejects Challenges to Newhall Ranch EIS and Section 404 Permit

In the latest decision in the long-running legal saga over the proposed Newhall Ranch development in Los Angeles County, the U.S. Court of Appeals for the Ninth Circuit upheld the Army Corps of Engineers’ EIS and Section 404 permit, giving substantial deference to the Corps’ decisionmaking. Friends of the Santa Clara River v. U.S. Army Corps of Engineers, 887 F.3d 906 (9th Cir. 2018).

Background

Newhall Ranch is a proposed large-scale master-planned community in Los Angeles County. The County approved a specific plan for the project that provided for more than 21,000 residential units and 4.4 million square feet of commercial, office, and retail uses. In connection with the project, Newhall Land and Farming Company applied to the Army Corps of Engineers for a permit under Section 404 of the Clean Water Act to discharge dredge or fill material into navigable waters. The Corps, along with the California Department of Fish and Wildlife, prepared a combined EIS/EIR. The EIS/EIR considered eight project alternatives, including Newhall’s preferred alternative, a no-build alternative and six other alternatives.

The Corps issued a Record of Decision that adopted one of the studied alternatives (“Modified Alternative 3”) as the least environmentally damaging practicable alternative. Modified Alternative 3 involved developing less acreage than Newhall’s preferred alternative, at a higher cost per developable acre. The Corps also determined that wastewater and stormwater discharges from the project would not affect endangered steelhead in the Santa Clara River downstream from the project. Based on this “no effect” determination, the Corps did not consult with the National Marine Fisheries Service on impacts to endangered steelhead.

The plaintiffs claimed that the Corps’ decisions violated the Clean Water Act, the Endangered Species Act, and the National Environmental Policy Act. First, the plaintiffs challenged the Corps’ selection of Modified Alternative 3 as the least environmentally damaging practicable alternative. Second, the plaintiffs challenged the Corps’ failure to consult with NMFS. Third, the plaintiffs argued that the EIS did not adequately analyze cumulative impacts on steelhead. Continue Reading

Development Agreements Cannot Be Adopted By Initiative

A development agreement cannot be adopted by initiative, the California court of appeal ruled in Center for Community Action and Environmental Justice v. City of Moreno Valley, 26 Cal. App. 5th 689 (2018).

The Development Agreement Statute

The Development Agreement Statute (Government Code sections 65864–65869.5) allows a municipal government and a property owner to enter into a contract that vests development rights by freezing the land use regulations applicable to a property. The statute includes procedural and substantive requirements for development agreements, including that “[a] development agreement is a legislative act that shall be approved by ordinance and is subject to referendum.” (Government Code section 65867.5(a).)

Background

The project at issue in this case was a proposed logistics center in Moreno Valley. In 2015, the Moreno Valley City Council approved project entitlements, including a development agreement. Opponents then filed a CEQA lawsuit to challenge the environmental impact report for the project. A group backed by the developer responded by filing a petition for an initiative that would repeal the development agreement ordinance and approve a new development agreement. The initiative development agreement was substantially the same as the agreement the City Council approved for the project. The City Council adopted the initiative, rather than submitting it to the voters. Because voter-sponsored initiatives are not subject to CEQA, no environmental review was completed before the City Council adopted the initiative. Opponents then filed this lawsuit, asserting that a development agreement cannot be adopted by initiative.

The Court’s Decision

Based on the statutory language, statutory scheme, and legislative history, the court determined that the Development Agreement Statute did not permit adoption of a development agreement by initiative. Continue Reading

Ban on Short-Term Home Rentals Is a “Development” Subject to the Coastal Act

Underlining the broad and expansive definition of “development” under the California Coastal Act, the Second Appellate District ruled that a coastal homeowners’ association’s ban on short-term rentals is considered “development” subject to the requirements of the Coastal Act. Greenfield v. Mandalay Shores Community Association, 21 Cal. App. 5th (2018)

The Mandalay Shores Community Association is the homeowners’ association for 1,400 residences in a beach community within the City of Oxnard coastal zone. Increasingly concerned about the parking, noise and trash problems caused by short term rentals, the Association adopted a resolution barring home rentals for fewer than 30 consecutive days. Owners who violated the ban would be fined by the Association: $1,000 for the first offense, $2,500 for the second, and $5,000 for each subsequent offense.

A Coastal Commission enforcement supervisor advised the Association that its ban on short term rentals constituted a “development” under the Coastal Act which required a coastal development permit. The plaintiffs, owners of a home in Mandalay Shores, then sued the Association to prevent enforcement of the ban, asserting it violated the Coastal Act.

The trial court denied the plaintiffs’ motion for a preliminary injunction, ruling that the Association’s ban on short term rentals was not a “development” under the Coastal Act.

The court of appeal reversed the trial court judgment, ruling that it had not correctly construed the Coastal Act. The court stated that, because a key goal of the Coastal Act is to maximize public access, “development” is broadly defined to include changes in density or intensity of use of land, and not just alterations of land or water. For example, the court explained, locking a gate that is usually open for public beach access over private land, or posting a “no trespassing” sign on a parcel used for beach access, are both “developments” because they have a significant adverse impact on public use of coastal resources.

Similarly, the court reasoned, preventing non-residents from vacationing—as they had for decades—at Mandalay Shores through the short-term rental of beach homes created a “monetary barrier to the beach.” The Association’s ban was therefore a “development” subject to the provisions of the Coastal Act. The question of whether short-term rentals should be regulated or banned would need to be decided by the Coastal Commission and the City of Oxnard, not a private homeowner’s association.

The appellate court ordered the trial court to grant the plaintiffs’ motion for a preliminary injunction, thereby preventing continued enforcement of the Association’s ban on short-term rentals.

Negative Declaration Survives Challenge Based on Non-Expert Opinion About Noise Impacts

Claims of significant noise impact unsupported by expert opinion, fact, or reasonable inference did not provide grounds for challenging a negative declaration, the court of appeal held in Jensen v. City of Santa Rosa, 23 Cal. App. 5th 877 (2018).

The project, called the Dream Center, would provide emergency shelter for homeless youth and transitional housing for young adults, as well as counseling, health, education, and job placement services. The center would also provide outdoor recreational activities for residents, including a basketball area, pottery throwing area, and garden. The center would occupy a vacant building formerly used as a hospital. A wooden fence and landscaping separated the rear parking lot from an adjacent residential neighborhood.

The City of Santa Rosa adopted a negative declaration and approved a rezoning and conditional use permit for the project. Conditions of approval limited parking in the rear lot to employees during normal operating hours. The city’s negative declaration relied on a noise study prepared by an engineering firm. The noise study concluded that noise impacts would be less than significant because noise would not exceed standards in the city’s general plan or noise ordinance, and would not increase noise levels more than 5 dBA Ldn above existing conditions. (Ldn is the average day/night noise level.)

The petitioners, who lived near the project, asserted there was a fair argument the project would cause significant noise impacts from vehicles in the rear parking lot and from outdoor recreation activities. The petitioners based their main arguments on their own calculations using data taken from a noise study for a different project in the city called Tower Market, a 24-hour convenience store and gas station.

The court held that no substantial evidence supported the petitioners’ claims. Continue Reading

Governor Signs Bill Extending the Life of Building Permits to One Year

Governor Brown has signed AB 2913 (Wood), which amends current law to extend the duration of building permits from six months to one year.

Under current law, a building permit is subject to the state Building Standards Code as well as any local ordinances in effect at the time the application for the building permit is submitted. The building permit is valid for six months, and expires automatically unless construction has commenced within that period or the permit is extended by the local jurisdiction under local codes (which is generally a discretionary decision and, in some jurisdictions, is not authorized at all under local law). If the permit expires without an extension, the builder must obtain a new permit, which is subject to any changes in the building code or local ordinances since issuance of the original permit, and may require costly changes in design and payment of additional permit fees.

AB 2913 extends the expiration date of building permits from six to twelve months. It also provides express statutory authorization to the local building official to grant one or more extensions for periods of up to 180 days per extension upon a showing a justifiable cause by the applicant.

Applicant Challenging Denial of Use Permit Must Prove It Is Legally Entitled to Permit

In an unsurprising decision, the Second District Court of Appeal upheld Ventura County’s decision to a deny a use permit that would allow tigers to be kept on property located within a half-mile of a residential area. Hauser v. Ventura County Board of Supervisors, 20 Cal.App.5th 572 (2018).

Background. Plaintiff Irena Hauser applied for a conditional use permit that would allow five tigers to be kept on a 19-acre parcel in an unincorporated area of Ventura County. The proposed project would include several tiger enclosures and an arena within a seven-acre area surrounded by a chain link fence. The plaintiff planned to use the tigers in the entertainment business and transport them for that purpose up to 60 times per year.

Neighbors strongly opposed the project and presented a petition to the county which contained roughly 11,000 signatures in opposition.  The planning commission denied the permit application, and on appeal, the board of supervisors did the same, finding the plaintiff failed to prove two elements necessary for a use permit: that the project was compatible with the planned uses in the general area, and that it was not detrimental to the public interest, health, safety or welfare.

The Court of Appeal’s Decision. The court of appeal upheld the trial court’s decision rejecting the plaintiff’s challenge. The court first explained that, as the permit applicant, the plaintiff had the burden to show she was legally entitled to a use permit. She had, however, failed to persuade the board of supervisors that the requirements for a use permit were met. In passing, the court stated that the board’s determination that the requirements were not met did not have to be supported by substantial evidence because it is the absence of evidence of sufficient weight and credibility to convince the trier of fact that leads to that conclusion. Nevertheless, the court undertook a thorough review of the record and found that the board’s decision was amply supported by substantial evidence.

The court noted that it would be appropriate to focus on the evidence that would tend to support the board’s decision rather than the evidence that would tend to detract from it. Where the trier of fact has drawn reasonable inferences from the evidence, a reviewing court does not have authority to draw different inferences, even though they might also be reasonable.

Applying this standard, the court observed that the property was located in an area that contained a significant number of homes and that it was reasonable for the county to conclude that keeping tigers was not compatible with the area’s use. This determination alone was sufficient to deny the permit application.

The court rejected the plaintiff’s argument that the project was compatible with the area’s open space zoning, declaring that a tiger compound surrounded by a chain link fence was not “open space.” Nor was the plaintiff entitled to a use permit simply because similar projects had been approved in other residential areas.

The court also found ample evidence supporting a finding that the tigers posed a danger to the public. Rejecting the plaintiff’s evidence that escaped captive-born tigers pose little risk to the public, the court cited evidence in the administrative record of numerous instances where tigers had escaped, and other instances where they had severely injured or killed people. The court noted that no matter what precautions might be taken to prevent the tigers from escaping, human error was foreseeable, if not inevitable.

The plaintiff further contended that the members of the board of supervisors violated board rules when they met outside of the public hearing with residents and representatives who opposed the project and that, as a result, the plaintiff did not receive a fair hearing before the board. However, the court found no violation because the board members disclosed the meetings as required by the board’s rules. Furthermore, the court noted that board members have both a right and a duty to discuss issues of concern with their constituents. Moreover, the plaintiff had not shown clear evidence of actual bias or that her application was not denied on its merits.

Court of Appeal Decision on Power Plant Licensing May Open Door to Expanded Judicial Review of Licensing Decisions

In Communities for a Better Environment v. State Energy Resources Conservation and Development Commission, 19 Cal. App. 5th 725 (2017), the First District Court of Appeal reversed the trial court’s conclusion that a challenge to the constitutionality of California’s process for judicial review of decisions of the State Energy Resources Conservation and Development Commission (Energy Commission) was not ripe. The practical effect of this decision may be to increase the difficulty in permitting and financing large, non-renewable power plants in California.

The Energy Commission has exclusive authority to license thermal power plants over 50 megawatts, “in lieu of any permit, certificate, or similar document required by any state, local or regional agency, or federal agency to the extent permitted by federal law.” Under Section 25531 of the Public Resources Code, decisions of the Energy Commission are reviewable only by the Supreme Court of California, and the Commission’s factual findings “are final and are not subject to review.” Review by the Supreme Court is discretionary and, in practice, the high court has summarily denied every challenge to an Energy Commission power plant licensing decision since energy deregulation in California in the 1990s.

The trial court dismissed the case on ripeness grounds, concluding that no actual controversy existed between the environmental groups and the Energy Commission that could be adjudicated in the context of a specific factual dispute.

On appeal, defendants argued that the trial court’s determination was correct because the groups were seeking a purely advisory opinion on the constitutionality of a statute, unmoored to any concrete factual dispute regarding an actual Energy Commission decision. The appellate court disagreed, finding that the dispute was sufficiently concrete for adjudication. Prior decisions had found cases to be unripe when “a factual context was necessary” to resolve the legal issue. But here, no factual context was necessary “or even useful,” according to the court, because the constitutionality of Section 25531 would be implicated in every future judicial review of an Energy Commission power plant licensing decision. The court also determined that ripeness should not operate to bar adjudication of the dispute before it because the consequences would be lingering uncertainty in the law despite the widespread public interest in the answer to a particular legal question.

Although the effect of this decision is merely to send the case back to the trial court for further adjudication, the court’s concern that the failure to address the constitutionality of Section 25531 would result in a “lingering uncertainty” suggests that the court found some merit to the environmental groups’ arguments. Without legislative intervention, the decision portends a more uncertain future for the development of large thermal power plants in California. Smaller power plant projects (under 50 megawatts) regulated by other state and local government agencies experience significant delay and increased risks from a complicated approval and permitting process. Larger plants licensed by the Energy Commission may soon confront the same challenges. The decision may have limited impact, however, as recent forecasts produced by the Public Utilities Commission show no appetite for new natural gas plants.

Major Changes Proposed to Endangered Species Act Regulations

The U.S. Fish and Wildlife Service and National Marine Fisheries Service recently published three proposed rules that would make major revisions to the regulations implementing portions of the Endangered Species Act. The proposed rules would change the criteria and procedures for (1) establishing protections for “threatened” species; (2) the listing and delisting of species and the designation of critical habitat; and (3) the interagency consultation process under Section 7 of the Endangered Species Act, which is used to determine whether a federal action would jeopardize a listed species’ continued existence or result in an adverse modification of the species’ designated critical habitat. Our complete report on the proposed changes, by Donald Baur, Marc R. Bruner, William G. Malley, Bradley H. Oliphant and Laura Godfrey Zagar is available here.

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.

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