An environmental impact report need not discuss impacts that are too speculative in nature for proper evaluation or assess economic costs not linked to a physical change in the environment. County of Butte v. Dept. of Water Resources, 90 Cal.App.5th 147 (2023).

In 2008, three local government entities challenged the California Department of Water Resources’ EIR prepared in connection with the licensure of hydropower activities for the Oroville Dam and have been litigating this issue for the past 15 years. In this latest case, plaintiffs argued that the EIR: (1) failed adequately to consider climate change; (2) failed to properly evaluate economic and public health impacts; (3) wrongly assumed that the Oroville Dam facilities complied with water quality standards; and (4) did not account for potential changes to the State Water Project that could affect the Oroville facilities.

Climate Change

The court rejected plaintiffs’ argument that DWR’s EIR should have included more discussion of the effect of climate change on the Oroville Dam facilities—particularly the Feather River Basin—over a 50-year licensing period. DWR’s analysis was based on multiple, reputable reports detailing the uncertainties in predicting regional climate change, which together supported DWR’s conclusion that discussion of potential changes to operations of the dam facilities necessitated by climate change would be speculative. DWR’s decision was consistent with CEQA Guidelines § 1545 which provides that, “[i]f, after thorough investigation, a lead agency finds that a particular impact is too speculative for evaluation, the agency should note its conclusion and terminate discussion of the impact.”

Economic and Public Health Impacts

Under CEQA Guidelines § 15064(e), an agency must consider the economic effect of a project if the effect contributes to, or is caused by, a physical change in the environment.  The court found that DWR’s EIR did not need to evaluate economic effects because the plaintiffs were unable to establish a link between any economic effect and a physical change in the environment caused by the project. While DWR’s consultant acknowledged that certain dam facilities would need to replaced and upgraded and calculated capital costs based on that assumption, this did not undermine DWR’s finding that the project would not trigger these changes. As to health impacts, the court rejected plaintiffs’ contention that DWR failed adequately to evaluate the increased level of mercury in fish resulting from mercury-laden sediment and the Office of Environmental Health Hazard Assessment (OEHHA) found the fish from the Oroville facilities safe to consume.

Water Issues

The court also rejected plaintiffs’ claims related to hydrologic studies and water quality. First, the court dismissed the claim that the EIR failed to properly analyze historical hydrologic conditions because plaintiffs had failed to raise these claims during the public comment process. Second, the court held that the EIR’s discussion of water quality and designated beneficial uses was adequate, rejecting plaintiffs’ contention that the EIR improperly relied on compliance with water quality standards. The EIR made clear that compliance with water quality standards was a necessary part of the licensing procedure and identified the proper agency from which to seek compliance: the State Water Resources Control Board.

State Water Project

The court found plaintiffs’ objections to the EIR on State Water Project grounds unpersuasive. DWR properly consulted with federal agencies and obtained biological opinions on impacts to endangered species from changes in the State Water Project before proceeding with its licensure of the dam facilities. While a federal court found both biological opinions inadequate and ordered the agencies to prepare new opinions, DWR acknowledged these developments in its EIR but reasonably concluded that it could not predict the terms of a new biological opinion concerning salmonids and that the terms of a new biological opinion related to Delta smelt would not affect the majority of release requirements from the dam.

Cost of Administrative Record

The court also turned down plaintiffs’ challenge to the award of $675,087 in costs to DWR for preparing the 320,000-page administrative record. The court noted that the record was unusually large, concerned a project spanning more than a decade and took over a year of “intensive and . . . continuous[]” efforts involving hundreds of DWR employees. Under these circumstances, the amount awarded was not unreasonable, and plaintiffs’ claims that DWR purposefully “r[a]n up the cost bill” because it disliked them and artificially increased the cost bill to solve budget difficulties were baseless.

The Court of Appeal upheld the City’s determination that compensatory mitigation for the loss of a historic building in the form of funding of other historic preservation was not feasible because there were no other buildings in the downtown areas with the same architectural style, period of significance, and purpose. Preservation Action Council of San Jose v. City of San Jose, 91 Cal. App. 5th 517 (2023), reh’g denied (May 10, 2023).

A project proposed by the City of San Jose included demolition of a bank, which was designated as a historic site. In response, San Jose proposed mitigation measures such as physical documentation and salvaging efforts in its supplemental environmental impact report (SEIR). Plaintiffs sued, claiming the City (1) failed to identify, analyze, and impose compensatory mitigation and (2) failed to adequately respond to the comments submitted to the draft SEIR.

First, the court held that the City’s discussion of compensatory mitigation measures in the Final SEIR complied with CEQA, agreeing with the City that the mitigation proposed by plaintiffs — funding of other historic resources —was infeasible. General funding of historic preservation would not mitigate the loss of the bank building because there were no other buildings in the downtown area with the same architectural style, period of significance, or purpose. The court also upheld the City’s conclusion that plaintiffs’ mitigation measures lacked the “essential nexus” and “roughly proportional” constitutional requirements under Nollan.

The court reasoned that the loss of non-transferable historic preservation was not equivalent to the loss of ecological habitats and threatened species. When an agency destroys ecological habitat, the preservation of similar habitat would create substitute resources with some equivalence, thereby lessening the impact of the loss. In contrast, “historical places are rarely fungible items of equivalent historical significance and value,” so general preservation of other historic resources would not lessen the specific loss of the bank.

In light of this, San Jose’s brief consideration and rejection of compensatory mitigation measures in the Final SEIR was sufficient. The City was required to consider mitigation measures that were feasible and would substantially lessen the significant environmental effects of projects. Plaintiffs’ proposed compensatory measures failed to substantially lessen the significant impact of the bank’s loss, so the City complied with CEQA when it briefly considered and rejected the measures. In addition, the court held that San Jose did not fail to adequately respond to public comments concerning compensatory mitigation. In responding to comments, an agency complies with CEQA when it responds with “good faith, reasoned analysis.” The court found that the Final SEIR’s discussion of the mitigation measures combined with the draft SEIR was a sufficient response to the comments.

The First District Court of Appeal held that a single deed conveying four or fewer contiguous lots can qualify for a presumption of legality under section 66412.6(a) of the Subdivision Map Act so long as the lots are separately described (including by reference to an antiquated subdivision map) and all other requirements of section 66412.6(a) are satisfied. Specifically, the court rejected the City of Oakland’s argument that the lot in question must have been separately conveyed as a single lot to have been lawfully established. Crescent Trust v. City of Oakland, 90 Cal. App. 5th 805 (2023).

Fox Oakland Theater, 1807 Telegraph Ave, Oakland, CA

The lot at issue, Lot 18, was first depicted on the Map of San Antonio filed with the County Recorder’s Office in 1854 and recorded in 1869. At that time, no state or local law existed “regulating divisions of land creating fewer than five parcels.” Crescent Trust acquired Lot 18, along with Lot 17 and part of Lot 16, in 2015 by a single conveyance. Although several other lots’ boundaries had been adjusted over time through various conveyances, Lot 18 remained as depicted on the 1854 Map of San Antonio.

Crescent Trust subsequently applied for a certificate of compliance for Lot 18, which the City denied on the ground that Lot 18 had been merged with several of its surrounding lots in 1933. Crescent Trust filed a petition for writ of mandate. The City opposed the writ petition, not on the theory that Lot 18 had been lost through merger, but on the ground that Lot 18 was never formally divided because it was depicted on an antiquated subdivision map and had never been lawfully created or separately conveyed as an individual lot. The City relied on Gardner v. County of Sonoma, 29 Cal. 4th 990 (2003), which held that “the recordation of a subdivision map…without something more (such as a conveyance), could not and did not work a legal subdivision of the property.”

Under Government Code section 66412.6(a), any parcel created prior to March 4, 1972, is presumed to have been lawfully created if (1) the parcel resulted from a division of land creating fewer than five parcels and (2) at the time of such creation, there was no local ordinance which regulated divisions of land resulting in fewer than five parcels. The Court of Appeal rejected the City’s argument that Gardner required Lot 18 to be separately and individually conveyed from the surrounding lands to enjoy section 66412.6(a)’s presumption of legality.

In contrasting the Supreme Court of California’s decision in Gardner to the present case, the Court of Appeal stressed that, (1) the Supreme Court’s holding there rested on a factual predicate not presented here: the Gardner lots had never been separately conveyed or separately described in a grant deed; and (2) the Gardner court did not consider section 66412.6(a), concluding that any argument based on that statute had been waived. Thus, the Court of Appeal reasoned, the City here relied on a “single-lot-only constraint on conveyances that the high court did not, in fact, impose.” Although Lot 18 was conveyed alongside contiguous properties, Lot 18 was “’separately described’ in every conveyance of fewer than five lots.” This “was wholly consistent with the law then, and now,” under which multiple, separately described lots can be transferred by way of a single conveyance, such as a grant deed. Accordingly, Lot 18 was lawfully subdivided and entitled to a presumption of legality under section 66412.6(a).

Contribution claims brought under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are not barred by prior environmental litigation if the property at issue and types of claims brought are distinct from previous claims. GP Vincent III v. Estate of Beard, No. 21-16555 (9th. Cir. May 17, 2023).

Defendants leased the subject property to a manufacturer who released PCE, which impacted the soil and groundwater of neighboring properties. In 1992, Defendants sold the property to a company that did not use PCE in its operations. In 2007, owners of the neighboring property discovered the PCE contamination from Defendants’ property and sued Defendants and the successor owner for cleanup costs under CERCLA. The parties entered into a settlement agreement in 2010 placing the burden to remediate on the successor owner, which failed to remediate and defaulted on its mortgage. The property was placed in state receivership.

Plaintiff later took title to the property and assumed cleanup obligations for the site under CERCLA and the California Land Reuse and Revitalization Act, which allowed it to seek contributions from previous landowners. Plaintiff sued Defendants and the manufacturer responsible for the contamination, but the district court held that Plaintiff’s claims were barred by claim preclusion.

The Ninth Circuit reversed, finding that Plaintiff’s case was not barred by claim preclusion. First, the prior and current CERCLA claims were different. The original litigation was limited to cleanup liabilities on the neighboring property, while Plaintiff’s claim concerned cleanup on the source property. Also, the original claim was brought under CERCLA section 113, which is an action for contribution, while Plaintiff’s claim was brought under section 107, which allows parties who have already incurred clean up costs to recoup their expenses. Second, CERCLA expressly contemplates successive cost recovery action because only costs already incurred can be recovered under section 107. Lastly, allowing a successive contribution action would ensure that the proper parties were held responsible for the cleanup. One judge concurred with the result but argued that it should have been based on lack of privity not identity of claims. The judge reasoned that CERCLA imposes a liability on the owner and the obligation does not run with the land. Therefore, Plaintiff did not meet the privity requirement for claim preclusion and could assert subsequent contribution claims.

The Ninth Circuit upheld the Federal Aviation Administration’s decision to study only the project and the no action alternative in an EIS for a new passenger terminal. However, the court found the FAA violated NEPA by failing to account for the combined noise that could result from the simultaneous operation of different types of construction equipment. City of Los Angeles v. Federal Aviation Administration, 63 F.4th 835 (9th Cir., 2023).

As early as 1980, the FAA and the local airport authority began planning to replace the passenger terminal at the Hollywood Burbank Airport, which no longer met federal standards. After a lengthy process that included passage of a local ballot measure in 2016, the FAA commenced preparation of a new Environmental Impact Statement to study the project. The EIS took several more years, and the FAA issued its record of decision in 2021. The City of Los Angeles, which owns 100 acres of the 555-acre airport site, sued.

The court first rejected LA’s claim that the FAA violated NEPA by studying only the project and the no action alternative in detail. The court upheld the FAA’s purpose and need statement for the project, which was to provide a passenger terminal that meets FAA standards, passenger demand, and building requirements and to improve utilization and operational efficiency of the terminal. It also approved the FAA’s screening process, in which the FAA considered 10 project alternatives, including an offsite location, a remote terminal, use of other airports, use of other modes of transportation, reconfiguration of runways, placing the new terminal in another area within the airport, and the no action alternative. The FAA screened out alternatives that did not meet the purpose and need, and those that would not be practical or feasible to implement in light of a development agreement the airport authority had entered into with the city, the ballot measure and other practical considerations such as space availability. The court concluded “Given FAA’s unchallenged technical and economic analysis that led to elimination of all alternatives except the proposed action and no action—as well as Los Angeles’s failure to identify a viable alternative that FAA did not consider—the circumstances here justify FAA’s conclusions.”

The court then agreed with LA that the FAA failed to take the required hard look at the environmental consequences of construction noise. The FAA had relied on the Federal Highway Administration Roadway Construction Noise Model User’s Guide and assessed the impacts of the loudest type of equipment – a jackhammer – on nearby residences. Though the FAA acknowledged that adding two sounds of the same level would increase sound levels by approximately 3 decibels, the FAA did not try to calculate the combined effects from multiple pieces of equipment operating simultaneously. This was not an inconsequential technical deficiency, but a fundamental error in the agency’s noise analysis. Nor was there any support for the FAA’s implied assumption that construction equipment would not be run simultaneously. The court accordingly remanded to the FAA to reconsider its construction noise analysis.

Remodeled residential units converted from space long dedicated to residential use are not considered new construction and are not exempt from local rent control under the Costa-Hawkins Rental Housing Act. NCR Properties, LLC v. City of Berkeley, No. A163003 (1st Dist., March 9, 2023).

Appellant landlords purchased two derelict single-family homes and rehabilitated them, converting them into triplexes, obtaining certificates of occupancy after completion of construction. After the units were rented out, a dispute arose as to whether the properties were subject to the City’s Rent Stabilization and Eviction for Good Cause Ordinance.

Appellants contended that the new units were exempt from local rent control under Costa-Hawkins, which provides an exemption for residential units that have a certificate of occupancy issued after February 1, 1995. The City disagreed as to four of the six units, noting that before appellants purchased the homes, the properties had been managed as rooming houses and two of the three units in each building were carved from space that had been rented for residential use before the current certificates of occupancy were issued.

The First Appellate District relied on prior caselaw holding that issuance of a new certificate of occupancy for conversion of an apartment to a condominium did not exempt the unit from rent control under Costa-Hawkins. It reasoned that Costa-Hawkins applied only to certificates of occupancy issued prior to residential use of the unit; hence buildings certified for residential occupancy prior to February 1, 1995, were not excluded.

Appellants argued that even if Costa-Hawkins applied only to certificates of occupancy that preceded residential use of a unit, the properties at issue qualified for an exemption because the renovations expanded and improved the living spaces, enabled the properties to house more people and created triplex units that had not previously existed. They pointed out that these renovations were no mere paperwork conversions and that the buildings were derelict and unoccupied before renovations began. The court acknowledged that the renovations were extensive and increased the ability to house more people, but ultimately rejected the appellants’ argument, observing that the City had found one unit in each building exempt from rent control as new construction, and the square footage of residential space that was subject to rent control appeared to be less than the square footage of the two units the City had exempted.

Plaintiff did not exhaust administrative remedies when challenging the City’s approval of a homeowner’s development project on the ground that a Class 1 categorical exemption was inapplicable. Arcadians for Environmental Preservation v. City of Arcadia, 88 Cal. App. 5th 418 (2023).

A homeowner applied for approval to expand the first story of her single-family home and add a second story. The City Council approved the project, finding it to be exempt from CEQA under the Class 1 categorical exemption for minor alterations to existing private structures.

The Second Appellate District held that plaintiff failed to exhaust its administrative remedies because it did not properly raise any claims specifically related to the project’s Class 1 exemption at the hearings on the project. Instead, plaintiff made only general statements in opposition to the project, which did not apprise the City of its contention that the project fell outside the scope of the Class 1 exemption.

Plaintiff argued that statements in the written administrative appeal were sufficient to fairly apprise the City of the objection to the exemption. These included references to environmental impacts and a request that the City prepare an EIR, which implicitly challenged reliance on the exemption. The court rejected this argument.  The cited statements were only general complaints in opposition to the project and were only general references to potential environmental impacts that even when considered together, did not come close to meeting the exhaustion requirement mandated by CEQA. The court noted that the exhaustion requirement is met when the exact issue is presented to the agency or is raised in the administrative proceeding and is sufficiently specific to fairly apprise the agency of the substance of the objection so that it has an opportunity to evaluate and respond to the challenge. Because plaintiff did not make specific challenges to the project’s Class 1 exemption and did not raise any other CEQA challenges during the administrative hearings, it failed to meet the exhaustion requirement.

The City of Irvine violated CEQA by approving a development project based on an addendum to a program EIR containing insufficient information regarding the project’s greenhouse gas emissions and by relying on CEQA’s Class 32 infill exemption, which was inapplicable due to unusual circumstances. IBC Business Owners for Sensible Development v. City of Irvine, 88 Cal. App. 5th 100 (2023).

In 2010, the City adopted a plan to guide development of the Irvine Business Complex (IBC) and prepared and approved a Program EIR, studying the effects of the development plan under CEQA. Nine years later, a developer proposed a project to redevelop a 4.95-acre parcel in the IBC. The proposed project would demolish an existing building and parking lots to construct a 275,000-square-foot office complex, consisting of a five-story office building, a six-story office building, and a seven-story parking structure.

City staff prepared an addendum to the EIR and the City Council approved the project, finding that all environmental effects of the proposed project had been adequately studied in the 2010 EIR. 

The Fourth Appellate District held there was insufficient evidence that the project’s greenhouse gas emissions were within the scope of the 2010 EIR and that no categorical exemption applied because the project could cause significant environmental effects due to unusual circumstances.

Addendum to EIR

The City argued that the addendum was proper because the project’s greenhouse gas emissions would be less than significant for two reasons. First, the project’s emissions would be consistent with the 2010 EIR and second, its emissions would comply with the thresholds drafted by the South Coast Air Quality Management District.

The court found there was insufficient evidence to support the City’s first conclusion. The City relied on the flawed understanding that the project was consistent with the EIR by assuming that the project incorporated all the mitigation efforts to achieve the EIR’s target of net zero emissions. The court explained that the incorporation of the mitigation measures alone did not constitute substantial evidence that the project was consistent with the target of net zero emissions. Moreover, even with all applicable measures in place, the large-scale nature of the project could cause it to emit a disproportionate level of greenhouse gases and that the addendum did not examine those emissions. The court explained that to demonstrate the project’s compliance with the EIR’s emissions plan, the City needed to analyze the project’s emissions within the context of present and future development in the IBC and demonstrate that its emissions would not prevent the IBC from achieving its goal of net zero emissions at full buildout.

The court also found the City’s conclusion that project’s emissions would comply with Air District thresholds to be legally incorrect. While the addendum did not discuss total emissions, draft documents indicated that the project would emit 5,563 metric tons of greenhouse gases per year. This was four times the applicable Tier 3 screening level of allowed emissions for commercial land uses established by the Air District. The addendum instead relied on the Air District’s Tier 1 threshold for projects exempt from CEQA based on the erroneous assumption that the project qualified for a categorical exemption.

CEQA’s Class 32 infill exemption

The City argued that any deficiencies in the addendum were inconsequential because the proposed project was categorically exempt from CEQA and thus the City was not obligated to perform any environmental review. The City relied on the Class 32 infill exemption applicable to projects characterized as in-fill development. However, the court concluded that the project did not qualify for the exemption because there was a reasonable possibility that it would have a significant effect on the environment due to unusual circumstances. The proposed project was not a standalone project but part of a plan to guide development in the IBC. The project would demolish an existing building and replace it with substantially larger buildings with more than double the office space originally allocated to the site that could have more substantial greenhouse gas emissions. The transfer of development rights required for this project would also be the largest ever approved in the history of the IBC development plan.

Thus, the size of the project, the scale of the transfer of development rights required to make it possible, the resulting density and the project’s estimated greenhouse gas emissions exceeding the Tier 3 threshold, constituted unusual circumstances that could result in a significant effect on the environment, making the City’s reliance on the Class 32 infill exemption improper.

A local organization appealed the denial of its challenge to the approval of an affordable housing project and disputed the trial court’s order requiring it to post a bond. The Court of Appeal rejected plaintiff’s contentions on the merits and held that the plaintiff was properly required to post a bond because it was delaying an affordable housing project. Save Livermore Downtown v. City of Livermore, No. A164987 (1st Dist., Dec. 28, 2022).

A nonprofit plaintiff group challenged the City of Livermore’s approval of a 130-unit affordable housing project on the grounds that it was inconsistent with the Downtown Specific Plan and violated CEQA. The project’s developer then moved for a $500,000 bond under Code of Civil Procedure section 529.2, which allows courts to order challengers to affordable housing projects to post bonds to cover damages that may be incurred from delay in carrying out the project.

First, the appellate court found there was substantial evidence that the project complied with the City’s Downtown Specific Plan. Inconsistencies between details of the project and standards in the specific plan such as main entrance orientation and window design were not sufficient for a finding that the project would not promote the overarching polices of the plan. 

Second, the court agreed with the trial court’s finding that plaintiff’s CEQA arguments were “almost utterly without merit.” The discovery of groundwater and soil contaminants at the site after the certification of the EIR did not constitute “new information” that would trigger reanalysis under CEQA because the EIR had addressed the potential presence of contaminants at the site due to past uses of the property.

Lastly, the court found that both conditions for issuance of a bond under section 529.2. were satisfied: “(1) the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart the low- or moderate-income nature of the housing development project, and (2) the plaintiff will not suffer undue economic hardship by filing the undertaking.” Plaintiff filed its petition at the end of the 30-day statute of limitations period and then delayed preparation of the administrative record, causing the hearing on the merits to be delayed. The court found no undue economic hardship because the record showed that the plaintiff nonprofit group was supported by more than 50 members, had spent “$37,000 commissioning plans for an alternative and unrealistic location,” and had hired a prominent and expensive law firm.

A trial court had jurisdiction to find that a denial of a permit application violated the Housing Accountability Act (HAA) on remand, even though the Court of Appeal did not expressly instruct the trial court to address the HAA issue. Ruegg & Ellsworth v. City of Berkeley, No. 2487258 (1st Dist., March 14, 2023).

Plaintiff applied for ministerial approval of a mixed-use development pursuant to the streamlined approval process for affordable housing projects outlined in Government Code section 65913.4. Plaintiff challenged the City’s denial of the permit, alleging that the City violated both the streamlining statute and the HAA, which prohibits local agencies from disapproving affordable housing development projects without making specified written findings.

The trial court originally found that the City did not err in denying the ministerial permit and did not reach the HAA issue. The Court of Appeal reversed and remanded to the trial court with directions to grant the writ petition, stating that it was “unnecessary” for the appellate court to address whether the City’s denial also violated the HAA. On remand, plaintiff argued that the trial court should decide the outstanding HAA issue in addition to granting its writ petition, and the trial court did so.

The Court of Appeal agreed that trial court had jurisdiction to decide the HAA issue because doing so was necessary to fully resolve whether the plaintiff was entitled to the relief sought by the petition. The Court of Appeal’s statement that it was unnecessary to address the HAA issue did not mean that the HAA issue was outside the trial court’s jurisdiction on remand—it left that issue open for determination by the trial court. In addition, plaintiff was not required to seek rehearing of the appellate court’s decision and seek modification of the remand instructions to include further proceedings on the HAA claims — the appellate disposition, read together with the opinion as a whole, gave no indication that the HAA issues were not to be resolved. The trial court’s issuance of the writ requiring the City to grant the ministerial permit also did not moot the HAA claim because determining the HAA claim allowed the trial court to provide further relief, including retaining jurisdiction to ensure enforcement of its orders and imposing fines for noncompliance.