Below are summaries of the key California and Ninth Circuit land use and development law cases decided in 2021.

1.  Planning and Zoning

CHEVRON v. COUNTY OF MONTEREY
70 Cal. App. 5th 153 (2021)

A county ordinance enacted by initiative effectively banned new oil and gas wells and use of wastewater injection (“fracking”) as part of extraction operations. The court held that these measures were preempted by Public Resources Code § 3106, which vests the State of California’s Oil and Gas Supervisor with exclusive authority to decide whether to permit an oil and gas drilling operation or the use of wastewater injection in such operations, leaving no room for local regulation. The court noted that its holding did not affect local regulation of the location of oil drilling operations, a matter not addressed by Section 3106 or the ordinance.

PEOPLE v. VENICE SUITES
71 Cal. App. 5th 715 (2021)

The State of California brought action alleging that the owner of an apartment building was illegally operating a hotel or transient occupancy structure in a building permitted to operate only as an apartment house for long-term tenants. The court held that the Los Angeles Municipal Code did not implicitly prevent an apartment house from being used for short-term occupancies of 30 days or less. The court reasoned that (1) a long-term occupancy requirement for apartment houses could not be inferred from definitions in a later-enacted section of the Code limiting transient occupancy structures to occupancies of 30 days or less and (2) the Code governing apartment houses could not be read in conjunction with either the rent stabilization ordinance or the transient occupancy tax ordinance to require long-term occupancy.

SCHREIBER v. CITY OF LOS ANGELES
69 Cal. App. 5th 549 (2021)

The density bonus law (Gov’t Code § 65915) requires cities to grant incentives to projects that provide a specified number of affordable housing units. Plaintiffs challenged the City’s grant of certain incentives to a project on the ground that the City had failed to require the applicant to provide financial documentation proving that the incentives were required to make the project “economically feasible” as required by a local ordinance. The court held that the referenced ordinance conflicted with Section 65915, which required the City, not the applicant, to bear the burden of proof justifying denial of a requested incentive. The local ordinance was accordingly preempted by Section 65915.

2. Coastal Act

KRACKE v. CITY OF SANTA BARBARA
63 Cal. App. 5th 1089 (2021)

In 2015, the City of Santa Barbara directed its staff to regulate short-term rentals as hotels, effectively banning short-term rentals in most residential areas. The court held that the City’s change in policy required Coastal Commission approval because it constituted a “development,” altering the intensity of use and access to land and water in the coastal zone. To proceed, the City would need to obtain a coastal development permit, an amendment to its certified local coastal program, or an amendment waiver. This decision reinforced that restrictions on short-term vacation rentals in the coastal zone—whether by a private entity or a local government—are subject to the Coastal Act and must be approved by the Coastal Commission.

LENT v. CALIFORNIA COASTAL COMMISSION
62 Cal. App. 5th 812 (2021)

The court upheld a Coastal Commission penalty of $4,185,000 on Malibu homeowners who refused to remove structures that blocked a public access easement granted to the Commission by a prior owner of the home. The homeowners claimed the penalty violated their due-process rights because it was over four times the amount recommended by Commission staff. The court ruled that due process did not mandate advance notice of the exact penalty the agency intended to impose so long as the agency provided adequate notice of the maximum amount of the possible penalty, which it did in this case. The court also found that the penalty did not amount to an excessive fine under the state or federal constitutions because the homeowners had a high degree of culpability—evidenced by their willful refusal to remove the structures—and their conduct effectively barred access to a beach that was part of a three-mile stretch of the coast with no other public access. Continue Reading 2021 Land Use and Development Law Case Summaries

The Second District Court of Appeal held that a Board of Supervisors decision on the appeal of a conditional use permit from the Planning Commission was untimely under the County Code and hence that the Planning Commission’s decision was deemed affirmed. Tran v. County of Los Angeles, No. B309226 (2nd Dist., Jan. 21, 2022).

The owner of a liquor store applied for renewal of the store’s conditional use permit for the sale of beer, wine, and spirits. The County Regional Planning Commission approved the conditional use permit. A member of the Board of Supervisors requested review of the Planning Commission’s decision, which the Board approved and the matter was set for public hearing on August 1, 2017. At the conclusion of that hearing, the Board approved a motion to “indicate its intent to approve” the CUP with restrictions more stringent than those approved by the Planning Commission and instructed county counsel to prepare the necessary findings and conditions for approval of the CUP.

On March 20, 2018, on its consent calendar, the Board adopted the findings and conditions prepared by county counsel and approved the CUP. The owner filed suit to reinstate the Planning Commission decision, contending that the Board decision was void because it had not been rendered within 30 days after the public hearing as required under the Los Angeles County Code.

The County Code provided that decisions by the Board “on appeals or reviews shall be rendered within 30 days of the close of the hearing.” The County argued that the 30-day requirement was directory, not mandatory; i.e., that the failure to take action within the 30-day period did not render the decision invalid. The appellate court disagreed, noting that the determination whether a procedural requirement is mandatory or directory is determined largely by its effect: If the failure to comply does not invalidate the action, the requirement is deemed directory; if, on the other hand, noncompliance does invalidate the action, the requirement is deemed mandatory.

Here, the 30-day decision requirement in the Code was mandatory, not directory, because another provision of the Code stated that if the “Appeal Body fails to act upon an appeal within the time limits prescribed . . . the decision from which the appeal was taken shall be deemed affirmed.”

The court also rejected the County’s argument that the Board rendered its “decision” when it adopted its “intent-to-approve” resolution at the close of the public hearing in August 2017, not when it took the subsequent actions on its consent calendar in March 2018. The court reasoned that approval of a CUP is an adjudicatory determination for which the agency is required to make findings sufficient to enable the parties to determine whether and on what basis they should seek review. A resolution simply indicating “intent to approve” a CUP, with no accompanying findings, did not accord with the requirements for an adjudicatory decision. The court also observed that issuing an “intent-to-approve” determination was a common procedural device for local agencies, serving to provide notice to parties and the public of the agency’s intended decision in advance of finalizing the necessary findings or conditions, but not, in itself, an operative decision as commonly understood.

Here, the Board’s “decision” in the context of the relevant Code provisions occurred when it adopted the findings and approved the CUP in March 2018, not when it adopted its earlier “intent-to-approve” resolution. Because the Board failed to render its decision within 30 days of the close of the public hearing, the decision of the Planning Commission was deemed affirmed.

A Summary of Published Appellate Opinions Under the California Environmental Quality Act

Introduction

The courts issued relatively few published CEQA decisions in 2021, with no California Supreme Court activity and no blockbuster court of appeal opinions. But two cases addressed topics of great current interest: wildfire and climate change impacts. One court also settled an important question under CEQA’s frequently invoked categorical exemption for infill development projects. And in a big year for exhaustion of administrative remedies as a prerequisite to litigation, three decisions reemphasized the key role played by local administrative procedures in the CEQA process.

Exemptions.  Three decisions on exemptions from CEQA came out during the year.  In one, the court had no trouble upholding application of the categorical exemption for small infill projects to a new gas station in a large shopping center, rejecting an argument that because the entire shopping center comprised more than 5 acres, the project, which would be built on only 2.5 acres, failed to meet the exemption’s limitation to 5-acre “project sites.”  In a second case, a court rejected an attempt to apply the existing facilities exemption to operations of an unlined landfill, ruling that unlined landfills did not constitute “facilities.” Finally, in a case involving the State Water Resources Control Board’s program for registering small water diversions when it receives a completed registration form, the court concluded: “CEQA does not regulate ministerial decisions—full stop.”

Negative Declarations. The two negative declaration cases decided during the year addressed key topical issues.  In a case in which neighbors raised concerns about evacuation during wildfires, the court concluded the objections were grounded in speculation rather than fact-based opinion, and upheld the negative declaration.  In the other case, the court found the agency had plainly erred by relying on a faulty climate action plan consistency checklist to find the project would not have a significant greenhouse gas impact.

Environmental Impact Reports. Several of the decisions involving EIRs are noteworthy.  The court of appeal reviewing the EIR for a new resort at Squaw Valley found it fatally flawed on multiple counts: Its description of the environmental setting failed to highlight the features of Lake Tahoe that make it a unique regional resource, and its analysis of water quality, air quality and construction noise impacts was insufficient.  By contrast, a court held that an EIR on a plan to restore natural resources and improve visitor facilities in a wilderness recreation area passed muster, even though it only considered one alternative — the no project alternative.  Another opinion in an EIR case provides useful guidance on the often perplexing requirement that EIRs identify “inconsistencies with the applicable general plan.” The deference due to a local jurisdiction in the interpretation and application of its own general plan under the Planning and Zoning Law cannot be evaded through a CEQA claim an EIR is defective by failing to “inform the public” of an inconsistency the agency has not itself found.

Subsequent CEQA Review. The only decision involving subsequent CEQA review addressed a set of somewhat puzzling claims.  The plaintiff challenged a decision by the State Lands Commission, acting as a responsible agency, to prepare a supplemental EIR, rather than a subsequent EIR, on limited changes to a previously approved desalination plant.  The court found no merit to appellant’s novel arguments that the commission was required to “step in as lead agency” and prepare a subsequent EIR on “the project as a whole” and that a supplemental EIR focusing on the project changes constituted improper “piecemeal” environmental review.

CEQA Litigation. Several thought-provoking opinions issued during the year involved CEQA litigation. In one, a court of appeal rejected a trial court order that allowed the agency to cure a defective mitigated negative declaration by preparing an EIR limited to three potentially significant impacts.  The court held that environmental review for a project cannot be split between two documents—a negative declaration and an EIR—and ruled that a “full EIR” was required.

In a decision that may cheer those who argue CEQA lawsuits are too often filed for improper purposes, the court found an aggrieved developer had identified evidence sufficient to allege a claim for malicious prosecution against a neighbor who had attacked the mitigated negative declaration for the developer’s project. Public agencies and project proponents should note, however, that behavior as egregious as that alleged against the neighbor in this case is, thankfully, rare.

Somewhat improbably, three of last year’s decisions involving CEQA litigation addressed a rarely asked question: What happens if the plaintiff doesn’t join the real party in interest in the lawsuit before the time to do so runs out?  The answer differs depending on the circumstances, but in sum: If a real party in interest is not sued timely and the real party is found to be “indispensable” as defined in the Code of Civil Procedure, then the suit will be dismissed.

Three other procedural decisions also provide an important reminder for both potential litigants and public agencies: To the extent a project opponent does not perfect its CEQA claims by following the local agency’s procedures for internal appeal of a CEQA determination, the opponent cannot pursue those claims in court.

Finally, one case decided during the year, although not surprising in its legal analysis, will likely be best remembered for its history:   After 27 years, the litigation over the EIRs on the Monterey Agreement—the agreement that changed the Department of Water Resource’s policies for allocating water supplied by the State Water Project—finally slogged its way to the finish line with an appellate court decision that resolved the remaining appeals in DWR’s favor, and a determination by the California Supreme Court that it would not review that decision.

The following summaries identify the key issues in the cases decided in 2021.  Each of these case summaries links to a post on this site that provides a more detailed description of the court’s opinion. Continue Reading CEQA YEAR IN REVIEW 2021

The court of appeal found that the California Coastal Commission erred by approving a coastal development permit for a residential development before environmental review for the project had been completed. Friends, Artists and Neighbors of Elkhorn Slough v. California Coastal Commission, 2021 WL 5905714 (No. H048088, 6th Dist., December 14, 2021).

The Commission’s staff report recommended that the permit be denied.  The report acknowledged the project would have significant adverse effects on the environment, that certain project modifications and design alternatives were necessary to address environmental issues, and that the project was inconsistent with several Local Coastal Program policies.  Nevertheless, at the conclusion of its hearing, the Commission approved the permit.  Staff then prepared a second report that analyzed, for the first time, various components of the project, mitigation measures, and conditions of approval. The report also contained a new, more favorable, analysis of oak woodland, water, visual, and traffic impacts, found the project would avoid significant environmental impacts, and took a new position on LCP consistency. The Commission’s findings for the permit approval were based on this report.

The court explained that the Commission must demonstrate full compliance with the provisions of its certified regulatory program in order to claim an exemption from CEQA’s EIR requirement.  This includes the requirement that a permit approval be preceded by the preparation of a written report which serves as the substitute for an EIR.  That report must contain detailed information on the project’s environmental impacts, alternatives, mitigation measures, necessary conditions of approval, and other information required to inform the Commission’s decision.

The court concluded the staff report for the Commission hearing was insufficient to serve this purpose.  It did not contain the complete discussion and analysis of the issues that must be provided before the Commission makes its decision. Because that information was not provided until the second report was prepared, after the Commission had acted, the court found its decision invalid.

 

Over a quarter century of CEQA litigation over the validity of an agreement between the Department of Water Resources and State Water Project contractors finally came to an end with the court of appeal’s decision in Central Delta Water Agency v. Department of Water Resources, 69 Cal. App. 5th 170 (2021), and the California Supreme Court’s denial of a petition for review of that decision.

In 1994, the Department of Water Resources entered into an agreement with State Water Project contractors called the “Monterey Agreement” in an effort to settle disputes over water allocations under long-term water supply contracts. Broadly, the Monterey Agreement modified formulas incorporated in the contracts for allocating water among SWP contractors, changed certain operations of SWP facilities and provided for the transfer of 20,000 acres of farmland for development of a water bank in Kern County.

Opponents challenged the legal adequacy of the program EIR on the Agreement. The court of appeal in Planning & Conservation League v. Department of Water Resources, 83 Cal.App.4th 892 (2000), found that the EIR violated CEQA because it had been prepared by two DWR contractors rather than DWR as lead agency, and continuation of a former contract provision relating to reduction in contractor entitlements in the event of a permanent water shortage should have been evaluated as a “no project” alternative. The court ordered DWR to prepare a new EIR but did not order that the Monterey Agreement, the contract amendments, or the land transfer be set aside, leaving it to the trial court to decide what further relief should be ordered. The case returned to the trial court, and after protracted negotiations, the parties entered into a settlement agreement which identified necessary contents of the EIR, allowed the SWP to continue operating as it had since the Monterey Agreement was adopted, and left the land transfer for the water bank in place.  The terms of the settlement were incorporated in the trial court’s writ of mandate.

In response to the writ of mandate, DWR continued ongoing operations under the Monterey Agreement while it prepared a new EIR. The new EIR was certified in 2010 and was quickly followed by three new lawsuits challenging its adequacy. Ultimately, the trial court upheld the new EIR, except for its assessment of the impacts of Kern Water Bank operations.  It ordered that the EIR be revised to reevaluate the water bank’s impacts on groundwater and water quality but allowed the Kern Water Bank to continue its ongoing operations in the meantime. Following certification of the revised EIR, yet another lawsuit was filed, but the trial court found the revised EIR was legally adequate and fully complied with court’s order. The court of appeal consolidated the appeals in the cases challenging the second and third EIRs.

Central Delta Water Agency, an appellant in the challenge to the second EIR, claimed that because that EIR treated continuation of SWP operations under the Monterey Agreement as the proposed project, the second EIR was an improper retrospective assessment of an ongoing project’s environmental impacts.  The court disagreed, concluding the approach taken was consistent with the writ of mandate, which allowed the project to continue while the new EIR was prepared.  The court also rejected an argument that the EIR should have included a “no project” alternative which would retain a prior contract provision that allowed DWR to refuse to deliver surplus water to contractors as necessary to avoid dependence on deliveries of surplus water.  The court found that the EIR had done enough by analyzing four no project alternatives, including two that addressed this prior contract provision, and also separately analyzed its practical effect.

In the case challenging the third EIR, appellant Center for Food Safety claimed, among other things, that the EIR failed to adequately address the water bank’s contribution to an increase in the planting of permanent crops that would result from improved water supply reliability.  The court disagreed, holding that the revised EIR’s finding that the water bank’s operations were not a primary cause of crop conversion it its service area was supported by substantial evidence, as was the EIR’s analysis of the impact of crop conversion on regional and statewide water supplies.  The court also rejected an argument that the trial court erred by issuing a limited remedy which allowed the water bank to continue operating while DWR revised the EIR.  Noting the trial court’s finding that invalidating the project approvals “would throw the entire SWP into complete disarray, smack in the middle of one of the most severe droughts on record,” the court of appeal concluded the trial court had not abused its discretion under the remedial provisions of CEQA, by allowing project operations to continue while the EIR was being revised.

The Monterey Agreement saga was finally concluded on January 5, 2022, when the California Supreme Court denied petitions seeking review of the court of appeal’s decision.

A trial court could not order a remedy that required preparation of an environmental impact report limited to the potentially significant impacts that led to invalidation of the project’s negative declaration — once the trial court found substantial evidence supported a fair argument that the project may have one significant environmental impact, it had no option but to require preparation of a “full EIR.” Farmland Protection Alliance v. County of Yolo, 71 Cal. App. 5th 300 (2021).

Yolo County had adopted a mitigated negative declaration for a use permit to construct and operate a bed and breakfast, commercial event facility and supporting on-site crop production.  The mitigated negative declaration acknowledged potentially significant impacts to agricultural resources and wildlife species and included measures to mitigate those impacts.

The trial court found substantial evidence supported a fair argument that the project may have a significant effect on three wildlife species despite the county’s adopted mitigation measures.  The trial court ordered the county to remedy this deficiency by preparing an EIR that would address the project’s impacts on the three relevant species.

The court of appeal characterized the question before it as whether an agency can comply with CEQA by preparing a negative declaration for some of a project’s impacts, and an EIR to address other impacts found to be potentially significant.  The court found no basis for allowing an agency to comply with CEQA by preparing a negative declaration to analyze some of the project’s impacts and an EIR to analyze others. CEQA requires that an EIR be prepared if any aspect of the project may have a significant effect on the environment. Thus, the court concluded that once a negative declaration is invalidated, the agency must prepare what it referred to as a “full EIR” for the proposed project—not an EIR confined to discrete impacts that would result from the project.

 

Courts may deny permissive intervention if there are already multiple parties in the case and the intervenor’s interests will be adequately represented by other parties. South Coast Air Quality Management District v. City of Los Angeles, No. B310783 (2d Dist., Nov. 4, 2021).

The South Coast Air Quality Management District filed a petition for a writ of mandate against four city entities and four shipping companies for failure to implement mitigation measures prescribed in a 2008 environmental impact report for operations at the Port of Los Angeles. The California Attorney General, California Air Resources Board, and a local union filed motions to intervene in the action. The trial court denied the union’s motion for permissive intervention, but granted limited mandatory intervention to CARB and allowed the Attorney General to intervene based on its statutory right.

Trial courts have discretion to permit nonparties to intervene in a lawsuit if the following four factors are met: (1) the nonparty followed proper procedures; (2) the nonparty has a direct and immediate interest in the action; (3) intervention will not enlarge the issues; and (4) the reasons for intervention outweigh any opposition by the existing parties.

The court of appeal agreed with the trial court’s decision to deny permissive intervention to the union because of the large number of parties involved in the case and the fact that the Air District’s interest in litigating the case without the union outweighed the union’s reasons for intervening. The union argued that it had a direct and immediate interest in avoiding the loss of union jobs that could result from rescission of the relevant permits and approvals. However, the court reasoned that other parties, such as the city, had a strong interest in defending the approval of the project and the continued operation of the terminal. There was no claim that the city or other parties might seek to carve out union jobs as unimportant while fighting to maintain operations at the terminal. It was therefore reasonable for the trial court to conclude that union participation would be largely cumulative and would unduly complicate the case.

The court noted that a union declaration underscored the risk of undue complexity by citing the 3,000+ union jobs that depended on operations at the Terminal and the 80,000 indirect jobs in the Los Angeles region related to terminal operations. The trial court “reasonably could conclude that permitting Union intervention in the lawsuit would spur representatives of the other tens of thousands of jobs connected to the Terminal to enter the fray . . . and [the] result would be unmanageable.”

The State Water Resources Control Board’s registrations of small water diversions are ministerial projects and hence exempt from CEQA. As such, allegedly erroneous registrations cannot be challenged under CEQA. Mission Peak Conservancy v. State Water Resources Control Board, No. A162564, 2021 WL 5917917 (1st Dist., Dec. 15, 2021).

The Water Rights Permitting Reform Act of 1988 created a streamlined process for a person to acquire a right to divert a small amount of water from a stream into a storage facility for domestic or certain other uses. To obtain this right, a person must register the use with the State Water Board, pay a fee, and put the water to reasonable and beneficial use. The registration form requires the person’s contact information; details about the proposed water use, diversion, and storage; a certification that the person has provided the information to the California Department of Fish and Wildlife (CDFW) and will comply with any conditions imposed by CDFW; and a copy of any such conditions. The registration is deemed completed, and the person obtains the right to appropriate water, when the State Water Board receives a substantially compliant registration form and the fee. The State Water Board has designated this registration process to be exempt from CEQA as a ministerial decision.

In this case, the petitioners challenged the State Water Board’s acceptance of a registration form that allegedly contained false information. The petitioners claimed that the State Water Board violated CEQA by accepting the registration without conducting environmental review. The trial court and the court of appeal agreed with the State Water Board that the registration process is ministerial and exempt from CEQA.

CEQA applies to public agencies’ discretionary projects, whereas ministerial projects are exempt from CEQA. A discretionary project requires an agency to exercise judgment or deliberation in deciding whether to approve an activity. In contrast, ministerial projects involve little or no personal judgment by the public official as to the wisdom or manner of carrying out a project. An agency’s action is discretionary if the law governing its decision to approve a project gives it authority to require changes that would lessen the project’s environmental effects; if not, the project is ministerial.

The court of appeal held that the registration process was ministerial because the State Water Board lacked authority to impose conditions on an individual registration to reduce its environmental effects. The court explained that the State Water Board’s role in reviewing a registration form for compliance essentially amounts to applying a checklist of fixed criteria.

The court rejected the petitioners’ argument that the registration process was discretionary because CDFW had authority to impose conditions to ameliorate the environmental impacts of water diversions. The court noted that the State Water Board must accept any conditions imposed by CDFW and has no authority to modify or shape those conditions. The court explained that the discretionary authority of one agency (CDFW) could not be imputed to a different agency (the State Water Board).

The court also rejected the petitioners’ argument that the State Water Board had discretion to deny the registration based on the alleged false information on the registration form. The court explained that the test was not whether an agency has discretion “in a colloquial sense” to deny a project, but whether the agency has legal authority to impose environmentally beneficial changes as conditions on the project. Here, the State Water Board had no such authority.

The petitioners also argued that the State Water Board’s acceptance of the registration violated CEQA because it did not meet the program requirements. The court disagreed. The court explained that the petitioners essentially claimed that the State Water Board made an erroneous ministerial decision by misapplying fixed criteria to the facts and by making factual determinations that were not supported by substantial evidence. But, the court held, that argument could not be a basis for a CEQA claim because “CEQA does not regulate ministerial decisions—full stop.”

In the first reported interpretation of a 2012 amendment to CEQA’s statute of limitations provisions, the First District Court of Appeal addressed “whether an action against a lead agency must be dismissed–despite being filed within the limitations period–because of a failure to [timely name and serve] necessary third parties.”  Save Berkeley’s Neighborhoods v. The Regents of the University of California (Collegiate Housing Foundation, American Campus Communities, et al.), 70 Cal.App.5th 705 (2021). Acknowledging that the Legislature sought to “provid[e] a bright-line rule as to which persons must be named [and served] in the CEQA complaint,” the Court nonetheless decided that Code of Civil Procedure Section 289(b)’s equitable test for determining indispensability still applies to determine whether an incurable failure to timely name and serve real parties requires dismissal of the entire action.

The Regents of the University of California filed a notice of determination on May 17, 2019, regarding certification of a Supplemental Environmental Impact Report analyzing an academic building, campus housing and parking project approved by the Regents for the Berkeley campus.  The NOD identified American Campus Communities and the Collegiate Housing Foundation as the parties undertaking the project.  Save Berkeley’s Neighborhoods’ June 13, 2019 petition for a writ of mandate failed to name either ACC or CHF.  A first amended petition filed on September 18, 2019, added ACC and CHF as real parties in interest, and a “first amendment to the first amended petition” subsequently sought to add various ACC entities as real parties.

ACC and CHF argued that the incurable failure to timely name and serve persons identified on a NOD as undertaking a project requires dismissal.  The First District rejected this argument, relying on legislative history to resolve textual ambiguities in Section 21167.6.5 and preserve the applicability of an equitable indispensable party analysis in CEQA actions.

Prior to 2012, Public Resources Code Section 21167.6.5(a) required that “any recipient of an approval” be named and served in CEQA actions as real parties in interest.  However, then-applicable PRC Section 21108(a) did not require state agencies to identify the “recipient of an approval” on NODs.  Courts enforced Section 21167.6.5(a) by 1) identifying the “approval” subject to challenge and the “recipients” thereof, and then 2) applying Code of Civil Procedure Section 389(b)’s equitable balancing test to determine whether unnamed approval recipients were indispensable such that an incurable failure to name them requires dismissal of the entire action.

Assembly Bill 320 (2012) amended Section 21108(a) to require state agencies to identify on notices of determination those undertaking a project supported by “contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies” or “that involves the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies.”  Public Res. Code § 21065(b) and (c).  AB 320 also amended Section 21167.6.5(a) “to replace the phrase ‘any recipient of an approval’” with ‘the person or persons identified by the public agency in its notice filed pursuant to” Section 21065(b) or (c).

The Court of Appeal held that amended Section 21167.6.5(a) does not require dismissal for failure to timely name and serve as real parties those identified on a NOD as undertaking a project.  It ruled that the use of “shall” in 21167.6.5(a) (“The petitioner or plaintiff shall name, as a real party in interest …”) “only requires that parties ‘shall’ file and serve the real parties in interest within a limitations period … Failure to do so excludes real parties in interest from the action.  The statutory language does not expressly condition a petitioner’s ability to bring suit upon the inclusion of the real parties in interest.”

Having found AB 320’s amendments left Section 21167.6.5(a) “silent as to the impact on a party’s failure to name and serve the real parties in interest,” the Court of Appeal concluded that the Legislature sought only to eliminate uncertainty arising from parties and courts “independently assess[ing] which entities qualified” as “recipients” of an “approval”–notoriously complex inquiries often involving “numerous sub-inquiries.”  The Legislature, however, did not address the courts’ use of CCP Section 389(b)’s equitable balance test to determine indispensability.  Reviewing the legislative history, the court noted that the Senate deleted a provision in the Assembly version of the bill that allowed a CEQA legal action to be “dismissed for failure to serve the recipients of the lead agency’s approval with the petition or complaint.”  The opinion also referenced the Legislature’s expressed intent to “prevent the dismissal of important and meritorious CEQA cases,” observing that “[t]he approach advocated by appellants would increase dismissal of CEQA cases.”

The City of San Diego’s approval of underground utility lines was incomplete because its Climate Action Plan checklist improperly allowed certain non-occupancy projects to avoid greenhouse gas emission (GHG) consistency analysis. To take advantage of streamlined GHG review, CEQA requires lead agencies analyze each project’s consistency with the Climate Action Plan, regardless of occupancy. McCann v. City of San Diego, 70 Cal. App. 5th 51 (2021).

Each year, the San Diego City Council approves plans to underground approximately 15 miles of utility lines. The selected areas are divided into groups based on city blocks, and then submitted for environmental review and project approval. In 2019, the City approved two undergrounding projects—one that the City found exempt under CEQA (“Exempt Project”) and another that the City approved subject to a mitigated negative declaration with monitoring for tribal resources during construction (“MND Project”).  San Diego property owner Margaret McCann challenged both approvals arguing the environmental review was inadequate under CEQA.

First, with respect to the Exempt Project, the court held McCann’s CEQA claims were barred because she failed to exhaust administrative remedies. The San Diego Municipal Code provides that a party wishing to challenge an “environmental determination,” which includes a project exemption, must file an appeal within 10 business days.  McCann conceded that no appeal was filed, and the court therefore concluded her challenge to the project exemption was barred.

Second, with respect to the MND Project, the court ruled that the City did not improperly segment the undergrounding projects and that the project description and consideration of aesthetic impacts were proper. However, the City’s GHG determination was not supported by substantial evidence. CEQA requires lead agencies to analyze the amount of GHGs a project will emit. To ease the burden of calculating individualized emissions for every project, a lead agency may adopt a Climate Action Plan which, if detailed and adequately supported, may be used to evaluate a specific project’s contribution to cumulative GHGs. A finding of consistency with the Climate Action Plan provides sufficient evidence for an agency to conclude the project has no significant GHG impact under CEQA.

Here, the City of San Diego’s overarching process—making a Climate Action Plan consistency determination to fulfill its obligation to evaluate GHG impacts under CEQA—was acceptable. However, the City erred by relying on an inadequate checklist to determine that the undergrounding project would have no significant GHG impact. The City’s checklist expressly stated that the Climate Action Plan consistency evaluation did not apply to certain projects, including those that did not require a certificate of occupancy, like the infrastructure project at issue, but the court found no rational basis for this exemption. The Climate Action Plan itself contemplated the GHG impact of many non-occupancy structures and these projects could have significant GHG impacts, too. Therefore, to avail itself of the streamlined GHG review a Climate Action Plan provides, the City was required to make a consistency determination for each project, whether within the scope of the checklist as written or not.

Without this required consistency analysis, the City’s determination that undergrounding would have no significant impact on GHGs was not supported by substantial evidence and the City abused its discretion in approving the mitigated negative declaration.