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In Friends of the Eel River v. North Coast Railroad Authority (2017) ___Cal.5th ___ (No. S222472) [http://www.courts.ca.gov/opinions/documents/S222472.PDF] the California Supreme Court held that the Interstate Commerce Commission Termination Act (ICCTA) does not preempt CEQA when a California public agency decides to undertake a new railroad project, even if the state agency later authorizes a private entity to operate the new rail line. The Court therefore concluded that the North Coast Railroad Authority (NCRA) was required to comply with CEQA prior to taking steps to reinitiate rail service on a segment of an interstate rail line that had gone out of operation for many years. The Court declined, however, to enjoin the ongoing operations of the railroad by NWPCo, the private operator. Because these operations had been occurring during the course of the litigation against NCRA, any such injunction would intrude into an area of activity that is preempted by the ICCTA, namely, private railroad operations.

The NCRA is a state agency created in 1989 for the purpose of resuming railroad freight service along a previously-abandoned route through Napa and Humboldt Counties. The northern portion of the line runs along the Eel River, while the southern portion, at issue in the case, runs along the Russian River.  In 2000, the Legislature authorized funding for NCRA’s program, with the express condition of CEQA compliance. NCRA subsequently contracted with NWPCo, a private company, to run the railroad. As part of the lease agreement between the two entities, NWPCo agreed that CEQA compliance by NCRA was a precondition to resumed operation. Accordingly, in 2007, NCRA issued a notice of preparation, and in June 2011, it certified a Final EIR. In July 2011, petitioners sued, challenging the adequacy of the EIR on a number of grounds. Concurrently, NWPCo commenced limited freight service along the Russian River. In 2013, NCRA took the unusual step of rescinding its certification of the Final EIR, asserting in explanation as follows: that ICCTA preempted California environmental laws; that the reinitiation of rail service was not a “project” under CEQA; and that the EIR NCRA had prepared had not been legally required. Although NCRA successfully removed the case to federal court, the case subsequently sent back to state court for a resolution of both the state CEQA claims and NCRA’s ICCTA preemption defense. The Court of Appeal sided with NCRA, finding that ICCTA was broadly preemptive of CEQA. The Supreme Court granted review.

Federal preemption is based on the Supremacy Clause of the United States Constitution, which provides that federal law is the supreme law of the land. Preemption can occur expressly, through the plain words of a federal statute, or can be implied, as when a court discerns that Congress intends to occupy an entire field of regulation, or when a court concludes that a state law conflicts with a federal purpose or the means of achieving that purpose. A federal statute can be preemptive on its face or as applied. There is a presumption against preemption, particularly in areas traditionally regulated by the states, which can only be overcome by a clear expression of intent (the Nixon/Gregory rule). The market participant doctrine is a related concept and holds that a public agency has all the freedoms and restrictions of a private party when it engages in the market (provided that the state does not use tools that are unavailable to private actors). The courts presume that Congress did not intend to reach into and preempt such proprietary marketplace arrangements, absent clear evidence of such expansive intent.

The Court began by recognizing that ICCTA does preempt state environmental laws, including CEQA, that interfere with private railroad operations authorized by the federal government. ICCTA contains an express preemption clause giving the federal Surface Transportation Board (STB) jurisdiction over railroad transportation (including operation, construction, acquisition, and abandonment). ICCTA’s purpose was both unifying (to create national standards) and deregulatory (to minimize state and federal barriers). Although ICCTA is a form of economic regulation, state environmental laws are also economic in nature when they facially, or as applied, dictate where or how a railroad can operate in light of environmental concerns. Such state laws act impermissibly as “environmental preclearance statutes.” These legal principles, however, did not extend to the actions of NCRA in this case. Just as a private railroad company may make operational decisions based on internal policies and procedures, and may even modify its operations voluntarily in order to reduce environmental risks and effects, so too may a state, in determining whether to create a new railroad line, subject itself to its own internal requirements aimed at environmental concerns. In the latter context, though, a state operates through laws and regulations, as opposed to purely private policies. When a state acts in such a manner, its laws and regulations are a form of self-governance, and are not regulatory in character. CEQA is an example of such an internal guideline that governs the process by which a state, through its subdivisions, may develop and approve projects that affect the environment. Viewed in this context, CEQA is part of state self-governance, and is not a regulation of private activity.

Although the market participant doctrine does not directly apply, being mainly applicable in Commerce Clause jurisprudence, the doctrine supports by analogy the view that that California was not acting in a regulatory capacity in this case. CEQA is analogous to private company bylaws and guidance to which corporations voluntarily subject themselves. By imposing CEQA requirements on the NCRA, the state was not “regulating” any private entity, but rather was simply requiring that NCRA, as one of its subdivisions, conduct environmental review prior to making a policy decision to recommence the operation of an abandoned rail line. If Congress had intended to preempt the ability of states to govern themselves in such a fashion, any such intention should have been clear and unequivocal. The Court found no such intent in the ICCTA.

The Court’s remedy, however, was cognizant of the narrowness of its holding. The Court concluded that, because NWPCo is currently operating the line, the California Judiciary could not enjoin that private entity’s operations even if, on remand, the lower state courts found problems with NCRA’s CEQA documentation. An injunction under CEQA against NWPCo would act as a regulation, by having the state dictate the actions to private railroad operator. Such action would go beyond the state controlling its own operations.

Sara Dudley

In San Diegans for Open Government v. City of San Diego (2016)(Case No. D069922), the Fourth District Court of Appeal upheld the City of San Diego’s denial of an administrative appeal of the City Planning Commission’s determination that an applicant’s modified design plans substantially conformed to the conditions and requirements of a previously issued development permit and that there was no need for further environmental review.

The challenged project involved a master plan, initially approved in 1997 and modified several times, for a mixed-use, industrial, commercial, and residential development. In 2012 the city approved a planned development permit to allow construction of the first phase of development. In November 2013, the applicant proposed design changes triggering the city’s Substantial Conformance Review (SCR) process under the permit. City staff reviewed the proposed changes to determine if the modified project was consistent with the previously approved project, including the existing environmental mitigation conditions. On January 30, 2014, the city’s development services department issued a written notice of decision approving the project and finding it to be in substantial conformance.

The petitioners appealed the decision to the planning commission, contending that the changes were substantial and that SCR review was not appropriate. The commission denied the appeal and upheld the SCR decision. The petitioners then attempted to appeal the decision to the city council, but the city refused to process the appeal, citing CEQA Guidelines section 15162 and San Diego Municipal Code section 113.0103. The petitioners filed a petition for writ of mandate asserting they were entitled to an administrative appeal before the city council. The trial court denied the petition and the petitioners appealed.

The court first rejected the petitioners’ arguments that they were entitled to an administrative appeal to the city council under Public Resources Code section 21151, subdivision (c). That section provides that if a “nonelected decisionmaking body of a local lead agency certifies an environmental impact report, approves a negative declaration or mitigated negative declaration, or determines that a project is not subject” to CEQA, that decision can be appealed to the agency’s elected decision-making body, if any. The court held that section 21151, subdivision (c), did not apply because the SCR decision did not certify an EIR, approve a negative declaration or mitigated negative declaration, or decide that the project was not subject to CEQA.

The petitioners further argued that the SCR decision was a decision that the project is not subject to CEQA, but the court rejected this argument. The court stated that city had already held that the project was subject to CEQA, and had required several environmental review documents and a mitigation monitoring and reporting program, all of which were considered as part of SCR process.

The petitioners also argued that a provision of the San Diego Municipal Code allowed appeals of “environmental determinations” to the city council, but the court disagreed. The court observed that the municipal code provision defining “environmental determination” was substantially similar to the activities in Public Resources Code section 21151, subdivision (c). Hence, the petitioners were not entitled to an administrative appeal of the planning commission’s decision to the city council under CEQA or the municipal code.

In Communities For A Better Environment v. Bay Area Air Quality Management District (2016) ___Cal.App.4th___ (Case No. A143634), the First District Court of Appeal held a petition for writ of mandate as time-barred under Public Resources Code § 21167, subdivision (d). Petitioners argued that the ”discovery rule” should apply because the Bay Area Air Quality Management District (“District”) failed to provide public notice of the ministerial approval and the project itself (a change in operation at a transloading facility from ethanol to crude oil) was “hidden from the public eye.” The court held that the statute governed when the public was deemed to have constructive notice of a project, and the discovery rule postpones the accrual of an action beyond the date of the injury, not beyond the date when the plaintiff is deemed to have constructive notice.

The District issued a ministerial permit for the project in July 2013, which was not subject to CEQA. But the District did not file the optional notice of exemption (“NOE”) and the applicant began transloading crude oil at its facility in October 2013. The conditions of the permit were modified in October and December of 2013, and the District issued a second permit incorporating these modifications in February 2014. On March 27, 2014 petitioners filed a petition for a writ of mandate. The District argued that the petition was time-barred because it should have been brought within 180 days of July 2013, when the permit was issued. Petitioners argued that they only became aware of the project on July 31, 2014, and that the facility is completely enclosed making the change in operation “invisible.” The trial court dismissed the petition without leave to amend as time-barred under 21167.

The First District Court of Appeal distinguished Concerned Citizens of Costa Mesa, Inc. v. 32nd Dist. Agricultural Assn. (1986) 42 Cal.3d 929 (“Concerned Citizens”). In Concerned Citizens, the Court interpreted “the date of commencement of the project” to mean “commencement” of the project approved by the lead agency and analyzed in the EIR. Because the project had changed significantly, the petitioners could bring an action within 180 days of when they knew or reasonably should have known that the project commenced was substantially different from the approved project. Here, petitioners did not argue that there was a substantial change in the project, and instead argued that the discovery rule should postpone the accrual of the action until they had actual notice of the project. The First District found this argument to have been rejected in Concerned Citizens, as contrary to legislative intent.

The Court of Appeal also distinguished Ventura Foothill Neighbors v. County of Ventura (2014) 232 Cal.App.4th 429 (“Ventura Foothills”). In that case, the height of a planned building was changed from 75 feet to 90 feet, and while a notice of determination (“NOD”) was filed because of the change, the NOD did not disclose the change in height. The court in Ventura Foothills determined that the 30-day statute of limitations for NODs only applied to the determinations announced in the NOD. Since the change in height was not disclosed, the 30-day statute had not run. Here, the petitioners could not point to any deficiencies in a required notice.

The court stated that in both cases the court interpreted the statute so that the triggering date for barring an action did not occur. Because petitioners could not argue for such an interpretation in this case, their claim was time-barred. Similarly, they could not amend their pleadings to show that the dates of constructive notice in 21167 had not occurred more than 180 days prior to their filing suit.

In Walters v. City of Redondo Beach (2016) ___Cal.App.th___ (Case No. B258638), the Second District Court of Appeal determined that the City of Redondo Beach did not err in finding a combination car wash and coffee shop project categorically exempt from CEQA and that unusual circumstances exception did not apply. The site was previously a car wash, but was unused since 2001 and the original structure had been demolished, leaving a vacant lot. The city approved a conditional use permit (“CUP”) and determined that the project was exempt under CEQA Guidelines § 15303, as “new, small facilities or structures [and] installation of small new equipment and facilities in structures.”

The dispute between the parties on the exemption concerned whether a car wash fits within the category of “commercial buildings” as defined in CEQA Guidelines section 15303, subdivision (c), and whether the car wash met the size restrictions of that section. The court held that the list in 15303(c) is illustrative and the section expressly includes “similar structure[s].” The car wash qualified because it was a consumer-facing commercial business, similar to those listed in 15303(c), and it included a coffee shop which qualifies as a restaurant. On the issue of size, the court found that, because the project was going to be in an “urbanized area,” the size limit was 10,000 square feet instead of 2,500. So the project’s 4,080 square feet was well under the limit. Lastly, the court found that there was no evidence that the project would “involve the use of significant amounts of hazardous substances” and was thus exempt.

On the unusual circumstances exception issue, the court applied the two tests discussed by the California Supreme Court in Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086 (“Berkeley Hillside”). Under the first test, the court first determines whether there are unusual circumstances under the substantial evidence standard, and, if unusual circumstances are found, “whether there is a reasonable possibility of a significant effect on the environment due to unusual circumstances” under the fair argument standard. The second test requires the challenger to establish unusual circumstances by showing that the project will have a significant effect on the environment.

In applying the first test, the court found that presence of other car washes in the surrounding area, and the fact that the site had been a car wash previously, indicated that the circumstances were not unusual. The court also stated that common operational effects, like noise, traffic, and parking do not constitute unusual circumstances in and of themselves. The court concluded that the petitioners had failed to produce substantial evidence supporting unusual circumstances based on the project’s features. The court therefore never reached the second, fair argument prong of the first test.

The court applied the second test from Berkeley Hillside, and found that petitioners failed to meet their burden under that test as well. Petitioners argued that the project will have a significant effect on the environment because operating a car wash would violate the city’s noise ordinance. The court found this unpersuasive because the city had found that the project would not violate the noise ordinance and took the extra step to condition approval of the project on its meeting the noise ordinance. Petitioners also argued that the project would have a significant adverse effect on traffic because the design of the car wash would cause backups within the property. The court stated that the flow of cars within the property was not “traffic” as defined by CEQA, and there was substantial evidence supporting the city’s finding that any such backups would not affect traffic on the streets.

The court concluded that neither of the Berkeley Hillside tests had been satisfied, and therefore the petitioners had failed to show unusual circumstances. The court upheld the city’s issuance of the CUP and finding that the project was exempt from CEQA.

In Joshua Tree Downtown Business Alliance v. County of San Bernardino (2016) __Cal.App.4th __ (Case No. E062479), certified for partial publication, the Fourth District Court of Appeal upheld a mitigated negative declaration providing insight on the subjects of urban decay and general plan consistency.

San Bernardino County adopted a mitigated negative declaration approving a 9,100 square foot general retail store. The intended occupant was Dollar General. The Joshua Tree Downtown Business Alliance, a group of local business owners, challenged the project on several grounds: (1) failure to adequately consider the project’s potential to cause urban decay; (2) failure to complete an EIR based on substantial evidence supporting a fair argument that the project would cause urban decay; (3) inconsistency with various economic goals and policies incorporated in the general plan; and (4) failure to disclose the intended occupant’s identity.

The Fourth District agreed with the lower court’s ruling that the county had considered urban decay but had simply concluded that because there was no evidence of a negative economic impact—there was likewise no evidence of urban decay. The court stated that economic impacts, alone, are not enough to require an EIR. By adopting a mitigated negative declaration, the county expressly found that there were no significant impacts through which economic impacts and urban decay could ultimately be traced.

The court further held that lay opinion regarding economic impacts did not qualify as substantial evidence. A business owner and former attorney with the Oregon Department of Justice provided extensive comments on the project’s potential to cause urban decay. The court stated that she was not an expert and was therefore not qualified to opine on whether the project would cause urban decay. Moreover, she had not provided any factual basis for her assertions. The county exercised appropriate discretion in deeming her testimony not substantial evidence.

The Fourth District also rejected petitioner’s claims that the project was inconsistent with the economic goals and policies in the general plan. Applying the abuse of discretion standard—rather than the fair argument standard as argued by petitioners—the court found that the county could reasonably conclude that the project was consistent with the general plan. The court stated that words in the policies such as “encourage” and “support” were “amorphous policy terms” that give the local agency some discretion.

Finally, in the unpublished portion of the opinion, the court rejected petitioner’s claim that the county had improperly withheld the identity of Dollar General as the intended occupant. CEQA did not require the county, in this instance, to identify the end user. In dicta, however, the court left open the possibility that disclosure of the end user may be required where it is “environmentally relevant.”

Written by Christina Berglund

In Center for Biological Diversity v. Department of Fish and Wildlife (2016) __Cal.App.4th__ (Case No. B245131), a partially published opinion on remand from the California Supreme Court (Center for Biological Diversity v. Department of Fish and Wildlife (2015) 62 Cal. 4th 204), the Second District reversed in part and affirmed in part the trial court’s judgment.

In the non-published portions of the opinion, the Second District reversed the trial court’s decision where it was inconsistent with the opinion of the California Supreme Court. The Second District reversed on the issues of significance criteria selection and baseline calculation, and affirmed on the issues of cumulative greenhouse gas emission impacts and two mitigation measures that would violate Fish and Game Code section 5515. The Second District also reconsidered its previous ruling in the case on two issues in light of the California Supreme Court’s holding that comments filed after certification of the joint EIR/EIS were timely. The Second District considered comments and the responses thereto, but stuck to its original conclusion that the findings on Native American Cultural Resources and impacts of dissolved copper on steelhead smolt were supported by substantial evidence.

In the published portion of the opinion, the Second District considered whether it had the authority to, instead of remanding the matter to the trial court, issue its own writ of mandate to the Department of Fish and Wildlife (DFW) and supervise compliance. The developer/real party in interest requested that the court do so, and its motion was supported by DFW. The developer suggested that the California Supreme Court’s opinion in this case and the language of Public Resources Code section 21168.9 would allow the appellate court to do so. They also argued that the general principle of expedient resolution to CEQA litigation supported the appellate courts ability to issue its own writ of mandate.

The Second District looked first at the plain language of section 21168.9 and determined that there was some ambiguity in the statute’s use of the term “appellate court” because courts of appeal do have original mandate jurisdiction in some cases. But the court’s exploration of the legislative history of section 21168.9 found nothing to suggest that the legislature intended appellate courts on direct appeal to have the authority to issue writs of mandate.

The court then examined the lay of the land, in terms of CEQA and appellate practice, when section 21168.9 was adopted in 1984. According to the Second District, “the practice in 1984 … was for administrative mandate petitions to be filed in superior court,” and no statute provided appellate courts with authority to hear direct CEQA challenges at that time. Further, the Code of Civil Procedure—then and now—limits an appellate court to affirming or reversing and modifying the lower court’s judgment. And, after making its decision, the appellate court must remand the matter back to the trial court. The court found nothing to suggest that the legislature intended to alter this procedure when it enacted Public Resources Code section 21168.9. The court also stated that there is a presumption against repeal by implication, which applied to the Code of Civil Procedure sections governing appellate review.

The Second District concluded there was no authority for appellate courts on direct appeal to issue writs of mandate. Given that lack of authority, there was no way for appellate courts to supervise compliance either. Lastly, the court found that section 21168.9, subdivision (b) was clear in its requirement that trial courts retain jurisdiction over the lead agency to ensure compliance with the writ of mandate.

In Bay Area Citizens v. Association of Bay Area Governments (2016) ___Cal.Rptr.3d___ (Case No. A143058), the First District Court of Appeal interpreted SB 375 as requiring the California Air Resources Board (Board) and regional agencies to set and meet the emissions reductions targets through regionally-developed land use and transportation strategies that are independent of existing statewide clean technology mandates. Therefore, the court of appeal upheld the Bay Area Metropolitan Transportation Commission and the Association of Bay Area Government’s (collectively, the Agencies) “Plan Bay Area” and its EIR, finding the opponent’s arguments failed because they were based on a misinterpretation of SB 375’s requirements.

SB 375 requires the Board to provide greenhouse gas emissions reduction targets to each region while taking into account statewide mandates such as the Low Carbon Fuel Standard and the New Vehicle Emissions Standards. Then, each regional metropolitan planning organization (MPO) must prepare a sustainable communities strategy to meet those targets. The Agencies prepared Plan Bay Area. The petitioners commented on the Plan’s EIR stating that the Agencies should have counted reductions expected from preexisting statewide mandates. When the Board’s staff conducted a technical review of the Plan, however, they stated that the Agencies had appropriately excluded greenhouse gas emissions reductions from other technology and fuel programs. The Board then issued an executive order with the staff’s technical report attached, accepting that Plan Bay Area, if implemented, would achieve the targets.

The petitioners alleged that the Agencies failed to comply with CEQA by incorrectly assuming that SB 375 compelled them to exclude compliance with statewide mandates when assessing strategies to meet emissions reductions targets. First, the court looked to the plain meaning and purpose of the statute and found that because the emissions reductions from the statewide mandates are projected to dwarf those achieved by SB 375, the whole statute would be superfluous if the MPOs were simply allowed to cite the expected reductions from preexisting initiatives. Further, the Board’s AB 32 Scoping Plan repeatedly emphasized that the regional land use and transportation strategies were distinct from the statewide mandates. Although the Board was required to take the statewide mandates into account when setting targets under SB 375, the statute did not require any specific approach and the board had discretion to instruct MPOs to exclude consideration of reductions expected from statewide mandates. The Board made this instruction clear when it approved of Plan Bay Area with the exclusion of reductions from statewide mandates.

On the alleged inadequacy of the Plan’s EIR, the court stated that the petitioner’s arguments were based on their misinterpretation of SB 375 and found the EIR adequate. The Agencies were not required to consider the appellants proposed alternative that relied on statewide mandates because, as discussed above, it did not comply with SB 375 and was therefore infeasible. Contrary to the appellants’ contentions, the EIR did not ignore statewide mandates. Consideration of the New Vehicle Emissions Standards and the Low Carbon Fuel standard were included when determining whether implementation of the Plan would result in a net increase in emissions and whether it would impede the goals of AB 32. Further, the court found that in light of the Agencies’ sufficient disclosures throughout the EIR, including when they did and did not consider statewide mandates, the appellant’s arguments amounted to an impermissible substantive attack on the plan.

Written by Sabrina S. Eshaghi

In Ukiah Citizens for Safety First v. City of Ukiah (2016___Cal.Rptr.3d___) the Fourth District Court of Appeal found that the city’s environmental impact report (EIR) failed to sufficiently analyze potential energy impacts and that the adoption of an addendum subsequent to EIR approval could not be considered in determining the EIR’s adequacy because it was not part of the administrative record. Therefore, the appellate court reversed the trial court’s ruling that the EIR was adequate when analyzed in tandem with the addendum.

The project at issue was a Costco warehouse store and gas station. The EIR concluded the project would have significant traffic impacts but the city certified it and adopted a statement of overriding conditions.  CEQA requires that EIRs propose mitigation measures to reduce the wasteful, inefficient, and unnecessary consumption of energy. Although the certified EIR mentioned energy impacts throughout, it did not contain a separate section devoted to energy impacts analysis. One section stated that since the project would comply with the California Code of Regulations Title 24 energy conservation standards, it would not result in wasteful, inefficient, and unnecessary consumption of energy.

Project opponents filed a petition asserting that the EIR failed to include adequate information regarding the project’s energy use. After the writ petition was filed, the Third District Court of Appeal issued an opinion finding that the analysis of energy impacts in an EIR substantially similar to the one at issue in this case was inadequate. In California Clean Energy Committee v. City of Woodland (2014) 225 Cal.App.4th 173 (CCEC) the Third District held that the energy analysis was insufficient for three reasons: (1) the EIR concluded the project would generate new trips without calculating the impacts of those trips; (2) the EIR improperly relied on compliance with the building code to mitigate energy impacts without analyzing the additional considerations required by appendix F; and (3) reliance on mitigation measures designed to reduce greenhouse gas emissions was misplaced because though there may be a correlation between the two, air quality mitigation is not a substitute for energy analysis. Ukiah’s EIR had all three of these problems. The city addressed these deficiencies by adopting an addendum to the EIR, and the trial court read the two documents together and concluded the energy analysis was adequate.

The court of appeal reversed the trial court’s decision upholding the EIR and found that subject to Code of Civil Procedure section 1094.5 the addendum was not part of the administrative record and therefore could not be considered in deciding whether the city abused its discretion in certifying the EIR. CEQA Guidelines section 15164, which allows the preparation of addendums, assumes the EIR previously certified was adequate and does not allow retroactive correction of inadequate EIRs. Thus, the court directed the city to set aside its project approval and certification of the EIR until recirculation of the energy analysis and consideration of public comments took place. The court did not offer any opinion on the adequacy of the addendum.

In the unpublished portion of the opinion the court rejected the rest of the project opponent’s arguments. First, the impacts from an interchange improvement discussed in the traffic section of the EIR did not need to be analyzed because it was a longstanding proposal that was needed regardless of the project. Second, the population estimates used in the traffic study were supported by substantial evidence. Third, the court held that the noise study was sufficient and that the impacts to nearby hotel guests were insignificant because nighttime deliveries already occurred for existing commercial uses. Lastly, the court found that the Airport Industrial Park specific plan, with which the project was inconsistent, did not apply because it was effectively superseded.

Written by Sabrina S. Eshaghi

In Center for Biological Diversity v. County of San Bernardino (2016) ___Cal.App.4th___, (Case No. G051058), the Fourth District upheld the Santa Margarita Water District’s certification of a final EIR and approval of a plan to pump groundwater in San Bernardino County. The court overturned the trial court’s ruling that Santa Margarita was not properly designated as the lead agency under CEQA and held that the EIR’s description of the project was sufficiently accurate.

The challenged project involved a plan  to construct 34 wells on property owned by Cadiz, Inc., to pump an average of 50,000 acre-feet of groundwater per year for 50 years, transport that water via pipeline to the Colorado River Aqueduct, and deliver that water to project participants, including Santa Margarita. San Bernardino County entered into an MOU with Santa Margarita, which designated Santa Margarita as the lead agency for CEQA purposes and tasked them with preparing the EIR.

The project opponents argued that Santa Margarita was not the proper lead agency under CEQA because San Bernardino County had to approve the project before pumping could begin. The Fourth District disagreed, stating that Santa Margarita was the proper lead agency under CEQA Guidelines section 15051, subdivisions (a), (b), or (d). San Bernardino had the most authority over the pumping, but Santa Margarita had greater responsibility over the project as a whole, which was to be partially carried out by a private party as well as Santa Margarita. Further, the MOU between San Bernardino and Santa Margarita was an agreement between the parties which designated Santa Margarita as the lead agency, which satisfied section 15051, subdivision (d).

The opponents also argued that the project description in the EIR was misleading and inaccurate, with regard to the description of the project objectives, the pumping, the time frame for pumping, and the total amount of water that would be extracted. The court held that the project’s fundamental purpose was to “save substantial quantities of groundwater,” and not just groundwater lost to evaporation, and thus the objectives were not misleading. As to the duration of the pumping phase of the project, the court found that the pumping could be “extended for a limited time” to fulfill the terms of the water delivery contracts, and that it could be extended to reach the total amount that can be extracted under the plan (2.5 million acre-feet). The court held, however, that extending the project beyond the 50 years would require a new agreement and additional environmental review, which would be too speculative to require at the outset. Lastly, the court found that the EIR’s description of the rate and total amount of groundwater withdrawal were sufficiently defined to not be misleading.

In Delaware Tetra Technologies, Inc. v. County of San Bernardino (2016) ___Cal.App.4th___ (Case No. G050858), the Fourth District upheld the County of San Bernardino’s approval of a Memorandum of Understanding between the county, the Santa Margarita Water District, and the Fenner Valley Mutual Water Company, that laid the groundwork for developing a plan for a groundwater pumping project. The court held that environmental review was not required under CEQA prior to the county’s approval of the MOU.

The project involved a public/private partnership to construct 34 wells on property owned by Cadiz, Inc., to pump an average of 50,000 acre-feet of groundwater per year for 50 years, transport that water via pipeline to the Colorado River Aqueduct, and deliver that water to project participants, including the Santa Margarita Water District. The county entered into the MOU with Santa Margarita and the Fenner Valley Mutual Water Company (the project operator) to establish a process for completing a plan for the project. Specifically, under the MOU, the parties agreed that a groundwater management, monitoring, and mitigation plan would be developed in connection with the finalization of the EIR for the project that would govern the operation and management of the project by Fenner Valley during the operational phase of the project. Once completed, the plan would need to be reviewed by the county for final approval.

Relying primarily on Save Tara v. City of West Hollywood, the project opponents argued that the MOU was one of several necessary steps in approving the project, and the county was therefore required to perform environmental review prior to approval of the MOU. The Court of Appeal disagreed.

The question was whether the approval of the MOU by the county would commit it to an activity with direct or indirect impacts on the environment. The court determined that the county retained full discretion to approve or disapprove the project despite executing the MOU and therefore had not committed itself as the City of West Hollywood had in Save Tara. Further, the court found that the act of approving the MOU did not exclude the consideration of alternatives or mitigation measures, which would typically be part of the environmental review, citing Cedar Fair L.P. v. City of Santa Clara.

The appellate court emphasized that its opinion did not foreclose environmental review under CEQA; in fact, the MOU required that an EIR be prepared prior to final approval of the project. The approval of the MOU was not a sufficient commitment toward the project to require an EIR on its own. The opponents also argued that approval of the MOU violated a county ordinance on groundwater management, but that issue was decided in an accompanying unpublished opinion, which the court referenced in holding that the MOU did not violate the ordinance.