CEQA YEAR IN REVIEW 2016

A Summary Of Published Appellate Opinions Under The California Environmental Quality Act

In 2016, the California appellate courts issued published opinions in 21 CEQA cases. In several of those opinions, including a ground-breaking decision by the California Supreme Court, the courts grappled with limits on the scope of required environmental review for a subsequent project approval after a negative declaration or EIR has previously been adopted or certified for the project. Other key decisions addressed emergent questions regarding the requirements for analyzing the impacts of greenhouse gas emissions and energy use, as well as mitigation of those impacts.

Courts also considered the boundaries of CEQA’s reach, one finding that CEQA is not concerned with the social and psychological effects of a change in community character, and another confirming that CEQA generally applies to a project’s effects on the environment, not to the environment’s impacts on a project. And in a controversial decision that may have far-reaching implications, an appellate court found an EIR deficient because it did not provide evidence supporting its use of policies from the agency’s general plan as standards of significance.

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California Supreme Court Rejects City’s Attempt To “Evade” General Plan Amendment Referendum

The California Supreme Court has unanimously denied an effort by the City of Orange to defend its approvals for a residential development project despite an intervening public vote that rejected a general plan amendment the city had passed to advance the project. By later attempting to make an “administrative correction” to its general plan, the court held, the city improperly sought “to evade the effect of the referendum petition.” Orange Citizens for Parks and Recreation v. Superior Court, No. S212800 (Dec. 15, 2016).

To resolve the case, the court was forced to grapple with the convoluted planning history underlying an open space tract recently approved for development as 39 residential units. In 1973, the city council adopted a specific plan that designated the property as open space, but also passed a resolution upholding the “recommendation of the Planning Commission” to designate the property as open space and low-density housing, not solely as open space. However, conforming revisions were not made to the specific plan. In 2010, the city adopted a new general plan that designated the project site as open space. The 2010 general plan stated that specific plans, including the 1973 plan, must be consistent with general plan land use policies.

The city council later approved the developer’s request to amend the general plan to allow housing on the property. Shortly thereafter, project opponents challenged the amendment by referendum. In response, the city “changed course” and argued there was no need to amend the general plan to approve the project because the 1973 resolution adopting the Planning Commission recommendation permitted residential development on the property. The city concluded, accordingly, that a successful referendum of its action amending the general plan would have no effect. The voters went on to reject the general plan amendment, and in ensuing litigation the courts were asked to determine whether an amendment was required to authorize the project.

The California Supreme Court said it was. The court determined that the city council conditioned its finding that the housing project was consistent with the general plan on the general plan amendment later rejected by voters. Nevertheless, the court continued, even if it were to assume the city had found the project consistent with the un-amended 2010 general plan, the court would not defer to the city’s finding. The court rejected the city’s argument that the specific plan had designated the property as open space and low-density housing. The 1973 planning commission recommendation to adopt this designation “never became integrated into the publicly available [specific] plan, let alone the 2010 General Plan.” Rather, the court stated, the 2010 general plan land use element gave the project site “an unambiguous designation” as open space, and the publicly available specific plan designated the property similarly.

Citing case law and Perkins Coie’s California Land Use and Planning Law treatise, the court concluded that the 2010 general plan land use designation had not informed the public that the property would be subject to residential development. The proposed general plan amendment, in contrast, did so, but was rejected by the citizenry. The city was not then permitted to conform its 2010 general plan to the 1973 planning commission recommendation through an “unreasonable” correction.

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.

Zoning Ordinance Is Not Necessarily a Project Subject to CEQA

The enactment of a zoning ordinance regulating medical marijuana facilities is not necessarily a project under CEQA, according to the court of appeal’s decision in Union of Medical Marijuana Patients, Inc. v. City of San Diego, 4 Cal.App.5th 103 (2016).   The decision makes it clear that a zoning ordinance is a project subject to CEQA only if it may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.

Union of Medical Marijuana Patients challenged a San Diego ordinance that regulated the establishment and location of medical marijuana consumer cooperatives, arguing that enactment of the ordinance was a project under CEQA and that the city should have analyzed its environmental impacts. UMMP relied on Public Resources Code section 21080, which states that CEQA applies to discretionary projects carried out or approved by public agencies, and includes enactment and amendment of zoning ordinances in its list of examples.

The court, however, explained that section 21080 cannot be read in isolation and must be reconciled with section 21065, which defines a CEQA “project” as “an activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment” that is directly undertaken, supported, or authorized by a public agency. The court concluded that while section 21080 lists zoning ordinances as an example of an activity undertaken by a public agency, a zoning ordinance qualifies as a CEQA project only if it also satisfies the first part of the definition in section 21065:  that it may cause a direct physical change or a reasonably foreseeable indirect physical change in the environment. The court also noted that the CEQA Guidelines—which are given great weight except where they are clearly unauthorized or erroneous—have a similar interpretation of the statute.

The court then addressed UMMP’s arguments that the medical marijuana ordinance would cause a reasonably foreseeable indirect physical change in the environment. (For its analysis, the court assumed, without deciding, that the San Diego ordinance regulating the location of medical marijuana cooperatives was a zoning ordinance.) The court held that there was insufficient evidence to support any of UMMP’s three arguments regarding the environmental impacts of the ordinance: (1) that it would force patients to drive farther to obtain medical marijuana; (2) that it would result in more home marijuana cultivation; and (3) that it would cause increased development.

This case is important in highlighting that the enactment of a zoning ordinance is not invariably a “project” subject to CEQA; it must be shown the ordinance will result in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment for CEQA to apply.

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).

Background

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.

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