City Does Not Have Burden of Showing Reasonableness of Housing Fees

Just over a year after the California Supreme Court strongly endorsed inclusionary housing ordinances, the Second District Court of Appeal upheld a city’s collection of in-lieu housing fees against a developer’s claim that the city failed to carry its burden of proving the fees were reasonably related to development impacts.  616 Croft Ave., LLC v. City of West Hollywood, No. B266660 (Second Dist. Sept. 23, 2016)

Last year, in California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015), the California Supreme Court ruled that inclusionary housing ordinances are legally permissible as long as it can be shown an ordinance is reasonably related to the public welfare.  The court rejected a claim that a city may impose inclusionary housing requirements on new residential development projects only if it first shows that the need for affordable housing is attributable to new development.  (Our full report on the state supreme court decision is available here.)

The court of appeal recently applied the California Supreme Court ruling to deny a challenge to the City of West Hollywood’s collection of fees for inclusionary housing.  The city requires developers of for-sale residential projects with 10 or fewer units either to sell a portion of the newly constructed units at below-market rates or, alternatively, to pay an in-lieu fee designed to fund construction of an equivalent number of affordable units.  The city conditioned approval of a developer’s condominium project on payment of in-lieu fees.  The developer paid the required fees under protest and filed suit.

Citing extensively from the California Supreme Court decision, the court of appeal rejected the developer’s claim that the city had the burden of proving the fees were “reasonably related” to the deleterious impact of the development.  The court held that the validity of in-lieu fees, as an alternative to an on-site inclusionary housing requirement, does not depend on whether the fees collected from a developer are reasonably related to that development’s impact on a city’s affordable housing need.  Rather, like an on-site requirement, in-lieu fees only must be reasonably related to the overall availability of affordable housing, and the challenger must show the fee schedule was invalid, an effort the developer here did not undertake.

City Council Can Sponsor Ballot Measure To Repeal Prior Initiative That Restricts Council Action

Elections Code section 9222 allows a city council to propose a ballot measure that repeals or amends a prior initiative. In Brookside Investment, Ltd. v. City of El Monte (2d. Dist. No. B267081, Nov. 15, 2016) the court held that section 9222 does not unconstitutionally interfere with the voters’ reserved power of initiative, even when the prior initiative restricts council action.

In 1988, the El Monte City Council enacted a mobilehome rent control ordinance. Two years later city voters approved an initiative that repealed the rent control ordinance.  That initiative also prohibited  the council from passing any ordinance relating to the subject of mobilehome park rents, and barred the expenditure of tax revenues in connection with any such ordinance.

Several years later, the city council proposed a ballot measure to repeal the initiative. City voters approved the repeal measure, and the city council then enacted new rent control ordinances.

Brookside Investment, Ltd., a mobilehome park owner, sued to invalidate the council-sponsored ballot measure, asserting that section 9222 could not constitutionally be applied to allow the city council’s measure repealing the prior initiative. The court disagreed.

The court first rejected Brookside’s argument that section 9222 unconstitutionally interferes with the voters’ right of initiative. The court acknowledged that the California Constitution expressly allows the State Legislature to propose ballot measures that repeal or amend prior initiatives, and that it does not contain a similar provision expressly authorizing local governments to do the same.  It held, however, that an express constitutional authorization was not necessary.  Since 1911, the California Constitution has given the Legislature the power to adopt procedures governing use of the local initiative power, and statutory measures allowing city councils to propose ballot measures that amend or repeal prior initiatives existed both before and after those constitutional provisions were enacted.  “In sum, far from withholding the power of local legislative bodies to independently propose ballot measures affecting voter-approved initiative ordinances, the 1911 constitutional amendments gave the Legislature the authority to establish procedures allowing such action.”

Brookside next argued that the voters have a constitutional right to enact an initiative that validly precludes a council from proposing a hostile ballot measure. It argued that section 9222 could not constitutionally be interpreted to restrict that right.  The court was not persuaded.  It noted that section 9222, which permits local voters to consider both voter-sponsored and city council-sponsored measures, including proposed ordinances affecting previously approved initiatives, “does not clearly narrow or impair the right of initiative guaranteed in the state Constitution.  In either case, amendment or repeal would be accomplished by popular vote.”

The court concluded, however, that it did not need to decide whether an initiative that purported to preclude a city council from later proposing a hostile ballot measure would impermissibly conflict with section 9222. The El Monte initiative did no such thing.  The court interpreted the language of the El Monte initiative to prohibit only the city council’s adoption of its own mobilehome rent ordinance without a vote of the people, not a council-sponsored ballot measure.

Finally, the court held that the city did not violate the prohibition in the voters’ initiative against the expenditure of tax revenues in connection with an ordinance relating to mobilehome park rents. Because the initiative did not preclude the city council from placing its measure on the ballot, the council did not violate the initiative’s prohibition against expenditures by incurring the costs typically associated with placing a measure on the ballot.

California Coastal Act Trumps Statutes Awarding Density and Height Increase Bonuses

Statutes awarding housing density and height increase bonuses do not take precedence over the California Coastal Act, according to a decision of the Second Circuit Court of Appeal. Kalnel Gardens, LLC v. City of Los Angeles, No. B264434 (2nd Dist. Sept. 29, 2016).

Kalnel Gardens, LLC, proposed to build a 15-unit housing complex in Venice. Two of the units were designated for very-low-income households.  Based on the inclusion of the very-low-income units, City of Los Angeles planning officials approved the project with density bonuses under the Housing Accountability Act, the Density Bonus Act, and the Mello Act, which together with other zoning concessions allowed the project to exceed local density, height, and setback restrictions. In addition to these concessions, City planning officials adopted a mitigated negative declaration under CEQA.  The City’s advisory agency approved the project’s vesting tentative tract map, and the City zoning administrator approved a coastal development permit under Coastal Act.

Neighbors appealed the planning approvals to the West Los Angeles Area Planning Commission, claiming, among other things, that the project violated the Coastal Act because its height, density, setbacks, and other physical and visual characteristics were out of character with the existing neighborhood. The Commission declined to consider issues related to the density bonus (which found to be outside its purview), and focused instead on the City’s discretionary power to issue coastal development permits under the Coastal Act.  The Commission found that the project did not conform to the Coastal Act because its size, height, bulk, mass and scale were incompatible with, and harmful to, the surrounding neighborhood, and because the setbacks were too small.  Kalnel appealed the Commission’s decision to the City Council, which denied the appeal and adopted the Commission’s findings. Kalnel then brought an administrative mandate action against the City alleging that it had violated the Housing Accountability Act, the Density Bonus Act, and the Mello Act.

The court of appeal upheld the City Council’s action, holding that density bonus statutes are subordinate to the Coastal Act.  Citing the Density Bonus Act, which is designed to address the shortage of affordable housing in California, but expressly provides that “[n]othing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the [Coastal Act],” the court held that “it could not be clearer that the Density Bonus Act does not supersede the Coastal Act or in any way alter or lessen its effect.”

The Mello Act, which establishes minimum requirements for affordable housing within the coastal zone, does not include a similarly clear statement, but the appellate court noted that if the legislature had intended the Mello Act to supersede the Coastal Act, it would have said so.  Further, the court explained, the Coastal Act is a comprehensive scheme to govern land use planning for the state’s entire coastal zone which requires the design of new developments to protect scenic views and to be “visually compatible with the character of the surrounding areas,” and provides that it shall be “liberally construed to accomplish its purposes and objectives.”  In addition, interpretive guidance provided by the Legislature under the Public Resources Code states that conflicts should be resolved in a manner which, on balance, is the most protective of significant coastal resources.  These provisions, the court said, make it clear that the Coastal Act must take precedence over the Mello Act.  A contrary interpretation, it reasoned, would permit Mello Act housing even if it blocked coastal access, intruded into environmentally sensitive areas, or was visually incompatible with existing uses. The Mello Act’s affordable housing requirements, the court held, apply to a project within the coastal zone only so long as the project conforms to the Coastal Act’s overall protective provisions.

Court of Appeal Clears the Way for Level 3 School Fees

The California Court of Appeal yesterday lifted a stay it had imposed in a lawsuit by the California Building Industry Association challenging implementation of “Level 3” school facilities fees. Lifting the stay allows the California State Allocation Board to formally notify the Legislature that it is no longer apportioning State funds for school facilities. Receipt by the Legislature of the notice will authorize school districts to impose up to twice the amount of their current “Level 2” fees.

As we reported earlier (State Allocation Board Approves Level 3 Fees), in May of this year, the State Allocation Board voted to notify the Legislature that “state funds for new school facility construction are not available.” By law, this notice authorizes school districts to increase their Level 2 fees by up to 100%, to a Level 3 rate. Under the State School Facility Program, Level 2 fees are intended to fund 50% of the cost of school facilities for new residential development, with the other half paid from State funds. If the State is no longer providing such funds, however, school districts are authorized to increase their fees to cover the full cost of new facilities.

The formal trigger for Level 3 fees is the notice from the SAB to the Senate and Assembly that school facility funds are not available. Although the SAB voted to provide this notice, the move was blocked when a judge issued a temporary restraining order barring the SAB from transmitting the notice pending further consideration of a lawsuit filed by CBIA challenging the Board’s decision. (See our report: Court Blocks Implementation of Level 3 Fees). The TRO was in effect until late August, when the trial court denied CBIA’s request for a preliminary injunction and dissolved the TRO.  However, CBIA filed an immediate request with the Court of Appeal for a stay pending its appeal from the trial court’s ruling.  The appellate court issued the stay, which was in effect until yesterday.

Now that the legal impediments have been cleared away, the SAB is expected to provide the formal notice to the Legislature. Once the notice is printed in the Senate and Assembly journals — which could occur in a matter of days — school districts will be authorized to levy fees at the higher, Level 3 rate which, in some districts, will mean fees of over $30,000 per residential unit.

UPDATE:  On November 1, 2016, the State Allocation Board sent Senate and Assembly Notification Letters providing notice that funds were no longer available for school construction under the State School Facility Program.

California Adopts Ambitious New Greenhouse Gas Reduction Targets

Governor Jerry Brown has signed two related bills that will tighten greenhouse gas limits and increase legislative oversight over the California Air Resources Board, SB 32 and AB 197. Some of the key components of the two bills include:

  • New state-wide target for reductions in GHG emissions. SB 32 requires CARB to reduce statewide GHG emissions to 40% below the 1990 level by 2030. It also requires CARB to update its Scoping Plan to address the 2030 target and ensure GHG reductions will benefit the state’s most disadvantaged communities.
  • Public reporting of GHG and other emissions. CARB will be required to publish data on GHG emissions, air pollutants and environmental toxins on its website, including emissions for “each facility” that reports such information.
  • Prioritized direct reductions in GHG emissions by large emitters. Under AB 197, CARB must “prioritize . . . direct emission reductions at large stationary sources.” This provision is intended to decrease CARB’s reliance on cap-and-trade to achieve GHG reductions and instead focus CARB on direct reductions at large emitters like power plants, refineries and manufacturing facilities.

The new legislation will likely trigger heightened CEQA scrutiny for new projects as well as new regulations, which will increase costs and risks for developers, utilities, manufacturers and the transportation sector. Consistency with AB 32’s 2020 GHG reduction goals is now accepted as an appropriate standard under CEQA for measuring the significance of GHG emissions. The new, more ambitious, goal for reductions in GHG emissions set by SB 32 is likely to be used for the same purpose.  In addition, the GHG reductions necessary to meet SB 32’s stringent 2030 goal may require CARB to impose additional restrictions on fossil-fuel plants, given the aggressive GHG reduction measures authorized by the bill.  Further, by requiring direct reductions in emissions, AB 197 gives CARB a statutory basis to target manufacturing facilities. Manufacturers will also face greater public scrutiny, as CARB will publish emissions data for individual facilities.  Additional GHG reduction measures will also likely be applied to the transportation industry, such as increased fuel efficiency requirements.

For a detailed discussion of SB 32 and AB 197, see our September 15, 2016 Update:  California’s New Climate Change Laws Tighten Limits on GHG, Increase Legislative Oversight of CARB

Municipal Regulation of Telecommunications Equipment In Public Right Of Way Based On Aesthetic Considerations Not Preempted

The California Court of Appeal has upheld municipal regulation of telecommunications equipment in the public right-of-way against the argument that such regulations are preempted by state law. T-Mobile West LLC v. City and County of San Francisco, No. A144252 (1st Dist., Sept. 15, 2016).

At issue was a San Francisco ordinance passed in 2011 that required permits for wireless telecommunications in the right of way based on aesthetic considerations. Several telecommunications providers sued to challenge the ordinance as being preempted by two sections of the California Public Utilities Code: Section 7901, which gives telephone corporations the right to install telephone lines in the public right of way “in such a manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters”; and Section 7901.1, which provides that local governments retain the right “to exercise reasonable control as to the time, place, and manner in which roads, highways, and waterways are accessed” and this control must “be applied to all entities in an equivalent manner.”

The court of appeal rejected plaintiffs’ arguments that the ordinance was impliedly preempted by sections 7901 and 7901.1. The court found nothing in section 7901 or section 7901.1 that divested cities of their broad police power under the state constitution to regulate local aesthetics. In doing so, the court adopted interpreted the phrase “incommode the public use” in section 7901 broadly to encompass aesthetic enjoyment.

The court also distinguished between local regulations requiring site-specific permits based on aesthetic considerations (such as the San Francisco ordinance) and regulations requiring local franchises. Site-specific discretionary permits do not prohibit use of the right of way; instead, they are used to harmonize the interests and rights of telephone corporations with cities’ and counties’ other legitimate objectives. Local franchise requirements, on the other hand, have the immediate effect of barring telephone corporations’ use of the public-right-way in the absence of a franchise agreement.

Plaintiffs also maintained that the ordinance conflicted with section 7901.1 because the ordinance singled out wireless equipment for application of the permit requirements. Relying on the statute’s legislative history, the court adopted a narrow interpretation of section 7901.1 as applying only to temporary access to the right of way for construction purposes.

This opinion essentially tracks the holding in the Ninth Circuit’s opinion in Sprint PCS Assets v. City of Palos Verdes Estates, 583 F.3d 716 (9th Cir. 2009), which also found that city regulation of wireless facilities for aesthetic purposes to not be preempted by Public Utilities Code section 7901 and 7901.1. This opinion does, however, contain a closer analysis of state court decisions and now provides California authority for this proposition.





MOU Allocating Responsibility for Development of Groundwater Management Plan Not a Project Under CEQA

The Fourth Appellate District has held that a memorandum of understanding between a water district, county, property owner, and water company outlining mutual responsibilities for preparing a groundwater management plan governing the installation and operation of groundwater extraction wells was not a “project” requiring review under CEQA. The court based its decision on its conclusion that the memorandum itself did not constitute the groundwater management plan, but rather established a process for completing the plan. The court reasoned that after the groundwater management plan was completed, the county would retain full discretion to consider the final EIR, approve or disapprove the proposed plan and project, and could require additional mitigation measures or alternatives. Delaware Tetra Technologies, Inc., v. County of San Bernardino, 247 Cal.App.4th 352 (2016).


In 2002, the County of San Bernardino approved an ordinance governing the pumping of groundwater within the county. The ordinance required that operators of groundwater wells, unless specifically excluded, obtain a permit and comply with specified standards to maintain the health of aquifers in which pumping occurs. Several years after the ordinance was enacted, a landowner and water company proposed to install a number of groundwater wells, extract groundwater from the wells for fifty years, and transport the water through a pipeline to an aqueduct, from which the water ultimately would be distributed by a water district to end-users.

In 2011, the water district released a draft EIR covering the proposed project for public review and comment. The following year, the water district, county, property owner and water company negotiated a memorandum of understanding governing the proposed project. In the MOU, the parties agreed that a groundwater management plan, which would include monitoring, and mitigation components, would be developed in conjunction with finalization of the EIR.  The county thereafter approved a resolution finding that the MOU satisfied the exclusion provisions of the ordinance, and that a permit for the proposed project therefore would not be required.

Petitioner, a company that alleged its business would be harmed by the proposed project, challenged the resolution, arguing that the county was obliged, but failed, to perform a full review under CEQA before approving the MOU. The trial court disagreed, and upheld the county’s actions. The petitioner appealed.

The Court of Appeal’s Decision

In the published portion of its opinion, the court of appeal affirmed the judgment of the trial court and held that the county was not required to perform an environmental review under CEQA before approving the MOU. The court observed that an agency has no duty to comply with CEQA unless its actions constitute “approval” of a “project.” A “project,” the court said, exists only if, among other things, an activity “may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment….” The MOU, the court concluded, merely established a framework for completion of the groundwater management plan, and required that the plan ultimately be submitted to the board of supervisors, at which time the county would have full discretion to consider the final EIR, approve or deny the project, or require additional mitigation measures or alternatives necessary to avoid or substantially lessen the environmental impacts of the project. Therefore, the court concluded, the county did not violate CEQA by approving the MOU without undertaking a full environmental review.

In reaching its decision, the court distinguished the cases (beginning with the California Supreme Court’s decision in Save Tara v. City of West Hollywood) in which the agency took steps which committed it to a definite course of action regarding the project. By contrast, the county’s MOU did not hamper its full discretion to approve, deny, or condition the groundwater management plan, or the proposed groundwater pumping project, in the future.

The Take Home Message

The Delaware Tetra Technologies court declined to rule that approval of the first step towards adoption of the groundwater management plan amounted to approval of the proposed groundwater pumping project. The project could not go ahead without 1) approval by the county of the MOU, 2) approval by the county of the groundwater management plan, 3) approval by the water district of the groundwater management plan, and 4) approval by the water district of a water purchase and sale agreement. Since the MOU merely established the procedural framework for development of the groundwater management plan, and the county would later have full discretion to approve, deny, or condition the plan, the approval of the MOU did not “cause” a change in the environment, either directly or indirectly, and therefore did not constitute a “project” requiring CEQA review.

Uncertainty About an Agency’s Discretion to Determine Historical Significance for Purposes of CEQA Is Finally Put to Rest

Resolving a long-standing debate, the court in Friends Of The Willow Glen Trestle v. City Of San Jose (H041563), 6th Dist. Aug. 12, 2016,  ruled that San José’s determination that a railroad trestle bridge was not a historic resource was to be evaluated under the substantial evidence standard of review. It rejected the argument that the fair argument standard should apply, even though San José made its determination in the context of a mitigated negative declaration.

San José proposed to demolish a wooden trestle bridge that had been constructed in 1922, and replace it with a steel truss bridge. The city evaluated the historical significance of the trestle bridge in an initial study based on a review of information that had been developed for an earlier project. Those earlier documents concluded that the trestle was typical of its kind, that bridge components had likely been replaced in the preceding decades, and that the trestle bridge was not historically significant. The initial study for the bridge concluded that, even though the trestle was “locally important,” it was not historically significant.

Project opponents submitted a report claiming the trestle was “an important historical icon” and concluding that it qualified for listing in the California Register of Historic Resources. The city disagreed, and ratified the initial study’s analysis by adopting a mitigated negative declaration.

The project opponents sued. They claimed the city’s determination was invalid because the record contained a fair argument that the bridge project may have a significant effect on historic resources. The trial court agreed and ordered the city to prepare an EIR. The issue on appeal was whether the city’s decision should be reviewed under the fair argument standard or the substantial evidence standard.

The Willow Glen Trestle court relied on the language of section 20184.1 of CEQA, which identifies criteria under which a resource is deemed or presumed to be historically significant. It noted that the statute allows an agency to determine that resources presumed to be historic (such as resources listed on a local register) are not historically significant when it finds “the preponderance of evidence” supports that conclusion. Logically, if it makes such a finding, that finding must be upheld if it is supported by substantial evidence. The court then reasoned that the same standard must apply to determinations made under the final sentence in section 20184.1, which applies to resources that are not presumed historic. “Since the standard of judicial review for a presumptively historical resource is substantial evidence rather than fair argument, it cannot be that the Legislature intended for the standard of judicial review for a lead agency’s decision under the final sentence of section 21084.1 to be fair argument rather than substantial evidence.”

The court also addressed other court decisions on the issue. It ruled that those cases were not dispositive, as they did not explicitly consider the appropriate standard of review of a determination whether a resource is historically significant. More importantly, the Willow Glen Trestle court rejected its 1997 decision in Architectural Heritage Assn. v. County of Monterey — the case which triggered a long-running controversy about the issue — stating that “our decision in Monterey did not accurately state the appropriate standard of judicial review that applies in this case.”


City’s Attempt to Use Emergency Ordinance to Scuttle Unpopular Project Violates Developer’s Vested Right

In Stewart Enterprises Inc., v. City of Oakland (2016) 248 Cal.App.4th 410 the court of appeal provided important clarification on the limits of a local agency’s ability to use an emergency ordinance to reach back and prohibit a previously-approved project.

Stewart Enterprises involved a proposed crematorium in Oakland. After obtaining administrative zoning clearance for the proposed use, the developer bought the property and applied for a building permit. Five days after the building permit issued – and due to public opposition to the crematorium – the city council adopted an emergency ordinance requiring a use permit for any new crematorium activity in the city.

The emergency ordinance was written to apply to “any building or structure for which rights to proceed with said building or structure have not yet vested pursuant to the provisions of State law. . .” Thus, the ordinance focused on vesting under the so-called “judicial” vested rights doctrine, which provides that a permit-based right does not “vest” until the developer has performed substantial work and incurred substantial liabilities in good-faith reliance on the permit. Having approved the emergency ordinance, the city notified the developer it could not proceed with the crematorium without first obtaining a use permit.

After the developer’s administrative appeals failed, it filed suit, claiming among other things, that the emergency ordinance impaired its vested right to go ahead with the crematorium. That claim was not based on the “judicial” vested rights doctrine, however, but on the city’s own permit-vesting ordinance, which provided, in part, that when a subsisting building permit has been lawfully issued “neither the original adoption of the zoning regulations nor of any subsequent rezoning or other amendment thereto shall prohibit the construction, or other development or change, or use authorized by said permit.”

The trial court sided with the developer, finding that the city’s permit-vesting ordinance precluded application of the emergency ordinance to require a use permit.

On appeal, the court evaluated three issues: (1) whether the developer had a vested right under the city’s permit-vesting ordinance; (2) if so, whether the emergency ordinance impaired that right; and (3) if the developer had a vested right that was impaired, whether the impairment was justified based on the need to protect public health and welfare.

The court quickly determined that the developer had a vested right under the city’s permit-vesting ordinance, since the ordinance precluded application of subsequently-enacted zoning regulations where application of the regulations would prohibit construction authorized under a given permit.

Next, the court found that application of the emergency ordinance would impair the developer’s vested right based on the simple fact that it prevented construction of the crematorium under the building permit. The court was unpersuaded by the city’s claim that the vested right was not impaired because the developer had the option of pursuing a use permit. The possibility the developer could regain the right to build the crematorium if it obtained a use permit does not, the court noted, change the fact that “a project can be ‘prohibited’ even if the fulfillment of certain contingencies might at some later date reauthorize it.”

Lastly, the court considered the city’s claim that impairment of the vested right was necessary in order to protect public health and welfare. While the courts have recognized that vested rights may be impaired when necessary to address a “menace to public health and safety or a public nuisance,” such a finding must be supported by substantial evidence. The court found that letters of opposition to the crematorium and general comments expressing concern about the crematorium’s potential effects on public health were insufficient to make the required showing. Although it declined to establish a bright line rule, the court indicated that to justify impairment of a vested right, the record would likely need to include “actual” evidence that the use poses an unmitigated risk to public health.

Stewart Enterprises does not cover new ground. However, the decision is an important reminder that a vested right—whether created as a matter of law or pursuant to a vesting ordinance – may not be impaired, no matter how unpopular the project, without the governing agency meeting a heavy burden of proof.


Bay Area Air Quality Management District’s CEQA Guidelines on Pollution Impacts to Project Occupants and Users Are Invalid

The significance thresholds for exposure of receptors to harmful air pollution in the Bay Area Air Quality Management District’s CEQA Guidelines cannot provide the basis for requiring an EIR or mitigation measures, when used to measure the impact of existing air pollution on future occupants or users of a project. As a result, the District’s Guidelines are invalid to the extent they indicate that lead agencies should ordinarily apply the receptor thresholds to evaluate the effects of existing environmental conditions on a proposed project’s occupants or users. California Building Industry Assn. v. Bay Area Air Quality Management District, No.A135335 (First Dist. as modified, Sept. 9, 2016).

Background. The lawsuit was filed by the California Building Industry Association seeking to overturn the District’s significance thresholds for exposure of receptors in a new project to existing toxic air contaminants and particulates. CBIA’s primary concern was that by increasing the burdens of CEQA compliance, the thresholds would hamper development of infill housing. Arguing that CEQA is limited to a project’s impacts on the environment, and does not extend to the environment’s impacts on a project, CBIA claimed the District’s receptor thresholds were inconsistent with CEQA to the extent they treat the impacts of existing air pollution on occupants or users of a new projects as an environmental impact.

In a decision issued in late 2015 (see our 12/17/2015 post) the supreme court ruled that an analysis of the effects of existing environmental conditions on a project’s occupants or users is ordinarily not required under CEQA, but that CEQA does require an analysis of how a project might exacerbate existing environmental hazards. The court sent the case back to the court of appeal, instructing it to consider the validity of the District’s significance thresholds in light of these principles.

The court of appeal’s opinion. The opinion issued by the court of appeal after the case was sent back to it contains four important rulings on use of the District’s receptor thresholds.

A lead agency may not require an EIR or mitigation measures for the sole reason that future project occupants or users will be exposed to health risks from a nearby source of harmful air pollution.

The District conceded that the purpose of the challenged receptor thresholds is to give public agencies reviewing a project under CEQA a basis for determining whether future occupants or users will be exposed to unacceptable health risks due to emissions from nearby pollution sources. That purpose, the court concluded, cannot be squared with the rule that CEQA does not generally require an agency to consider the effects of existing environmental conditions on a proposed project’s future users or occupants.

Public agencies may elect to evaluate the effect of existing environmental conditions on future occupants or users of their own projects.

The supreme court had noted in its opinion that CEQA does not bar a public agency from considering the effect of existing conditions on a project it proposes to undertake itself. Accordingly, the court of appeal ruled that an agency may elect to use the District’s receptor thresholds as guidance in assessing the effect of emissions on occupants or users of its own projects.

The District’s receptor thresholds may be applied to determine whether a proposed project would worsen existing environmental conditions.

CEQA’s focus is on the changes a proposed project will make to the physical environment. As a result, when a project might worsen existing environmental conditions, the District’s receptor thresholds may appropriately be used to assess the impacts on project occupants or users to the extent the impacts stem from changes the project will make to the environment.

The District’s receptor thresholds may be used to analyze impacts on a project’s occupants or users where such an analysis is required by statute.

Several provisions of CEQA require an analysis of the health effects of existing environmental conditions on a project’s occupants or users in specific situations. These statutes include school siting and construction projects and exemptions from CEQA for various categories of housing development projects. Because these statutes mandate an analysis of the impacts of air pollution on the project’s occupants or users, the receptor thresholds may permissibly be used for that purpose.

Conclusion. The court rejected the District’s argument that its Guidelines were merely advisory, finding that “they suggest a routine analysis of whether new receptors will be exposed to specific amounts of toxic air contaminants” Having ruled that it would be improper for a lead agency to use the District’s receptor thresholds to require an EIR, mitigation measures, or other CEQA review when such a use is not authorized, it concluded the Guidelines should be invalidated in part. The court accordingly instructed the trial court to issue an order invalidating those portions of the District Guidelines that suggest lead agencies should apply the receptor thresholds “to routinely assess the effect of existing environmental conditions on future users or occupants of a project.”