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Fourth District Holds Storm Drainage Repair and Subsequent Revegetation Project Properly Exempted from CEQA

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The City of San Diego appealed a judgment granting CREED-21’s petition for injunctive and other relief for CEQA violations relating to emergency storm drainage repair and revegetation projects in La Jolla. The court held in favor of the City, finding it had used the correct baseline and had properly issued an exemption for the revegetation project. Furthermore, CREED had not been denied its due process right to a fair hearing. The court affirmed the judgment below to the extent it declared the City’s appeal fee assessment invalid and set it aside. The opinion, filed January 29, was certified for publication on February 18. CREED-21 v. City of San Diego (Feb. 18, 2015) ___ Cal.App.4th ___, Case No. D064186.

In 2010, the City issued an emergency permit for storm drainage repair work, and a notice of exemption from CEQA for the work. The emergency permit was conditioned on seeking a permanent permit and implementing a revegetation plan. The City found the revegetation plan to be exempt from CEQA relying on the “common sense” exemption and two categorical exemptions. CREED filed a lawsuit challenging the revegetation plan, and the work performed under the emergency permit. CREED argued that in reviewing the revegetation plan, the City was required to consider the physical setting of the area prior to the emergency storm drainage work, rather than after when the revegetation work commenced. The court refused to set the baseline earlier. The court similarly held that CREED did not have standing to challenge the 2010 emergency exemption, as it had missed the statute of limitations to challenge that project.

CREED argued that the 2010 emergency exemption was merely for temporary work, and that CEQA required the City to conduct at least a preliminary review, if not an initial study and EIR, to determine whether the already completed repair work might have a significant effect on the environment. The court disagreed, noting that any argument about the temporary status of the emergency work performed by the City in 2010 was based solely on the San Diego Municipal Code and not on CEQA or the Guidelines.

The court found that the City properly relied on the common sense exemption to find the revegetation project exempt from CEQA under Guidelines section 15061, subdivision (b)(3). That exemption applies where there is no possibility that the activity in question may have a significant effect on the environment. Because the revegetation plan would indisputably improve the site’s physical conditions—consisting primarily of bare dirt—the plan would not cause an adverse change so as to constitute a significant effect on the environment. The court added that the revegetation plan would also be exempt under the Class 1 exemption for existing facilities, which encompasses repair to existing topographical features. CREED failed to satisfy its burden of showing that the unusual circumstances exception applied to override the exemption.

The court also found CREED was not denied due process of law when the City did not timely disclose a document requested under the California Public Records Act. The City Council heard and denied CREED’s appeal of the City’s exemption determination, but did not provide CREED with a copy of the initial study until after that hearing. This omission did not deny CREED its right to due process and a fair hearing. CREED had received reasonable notice of the hearing and a reasonable opportunity to be heard.

Finally, the Fourth District held that the trial court had not abused its discretion by denying the City’s request for judicial notice of an ordinance and by finding that an appeal fee was unauthorized. There was no evidence in the record authorizing the $100 appeal fee. CREED alleged there was also no provision in the Municipal Code authorizing the City to charge a fee for an administrative appeal. The City argued there was an ordinance authorizing such fees, and requested the court take judicial notice of the ordinance. The court found the City had not given CREED sufficient notice of its request for judicial notice to allow for preparation of an opposition, and the request’s lack of an attachment listing specific fees rendered the document insufficient for the court to take notice.

Third District Court of Appeal Upholds EIR for Sacramento Kings’ Downtown Arena Project

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The Third District Court of Appeal held that the City did not prematurely commit to the arena project by entering into a nonbinding term sheet with the Sacramento Kings or by engaging in land acquisition through eminent domain before the EIR process was complete. The court further determined that the EIR included an appropriate range of alternatives and adequately analyzed traffic and safety impacts. Saltonstall v. City of Sacramento (Feb. 18, 2015) ___ Cal.App.4th ___, Case No. C077772.

The case involves a challenge to the certification of an EIR and approval of a new entertainment and sports arena in downtown Sacramento that will eventually house the Sacramento Kings. To facilitate the timely opening of the new downtown arena, the Legislature modified several deadlines under CEQA by adding section 21168.6.6 to the Public Resources Code.

The City certified the EIR and approved the project in May 2014. Opponents of the project immediately filed a lawsuit against the City and sought a preliminary injunction to stay construction. The trial court denied the preliminary injunction, and the Court of Appeal affirmed that decision. The appellate court ruled that petitioners failed to satisfy the requirements for a preliminary injunction and held that section 21168.6.6 was not unconstitutional. (Saltonstall v. City of Sacramento (2014) 231 Cal.App.4th 837.) The trial court subsequently rejected the lawsuit in its entirety. Petitioners appealed.

In the appeal, petitioners argued (1) the City violated CEQA by committing itself to the downtown arena project before completing the EIR process, (2) the City’s EIR failed to consider remodeling the current Sleep Train Arena as a feasible alternative to building a new downtown arena, (3) the EIR did not properly study the effects of the project on interstate traffic traveling on the nearby section of Interstate Highway 5, and (4) the City did not account for large outdoor crowds expected to congregate outside the downtown arena during events. Petitioners also argued that the trial court erred in denying their motion to augment the record and in denying their Public Records Act request to the City to produce e-mail communications with the NBA. The Court of Appeal rejected all of petitioners’ claims.

The Third District first dismissed the claim that the City prematurely committed itself to approving the project. Petitioners claimed the City violated CEQA by engaging in land acquisition for its preferred site and entering into a preliminary term sheet with Sacramento Basketball Holdings LLC before finishing the EIR. Rejecting this argument, the Court held that the City was allowed to engage in land acquisition for its preferred site before finishing its EIR under CEQA Guidelines section 15004 and Public Resources Code section 21168.6.6. Guidelines section 15004, subdivision (b)(2)(a), expressly provides that “agencies may designate a preferred site for CEQA review and may enter into land acquisition agreements when the agency has conditioned the agency’s future use of the site on CEQA compliance.” Moreover, Public Resources Code section 21168.6.6 expressly allowed the City to exercise its eminent domain power to acquire the 600 block of K Street as the site of the arena before finishing the EIR. Finally, the court held that the preliminary term sheet did not improperly commit the City to approving the arena as proposed. The preliminary nonbinding term sheet constituted an agreement to negotiate regarding the project and did not foreclose environmental review, mitigation, or even rejection of the project.

Turning to petitioners’ claim that the alternatives analysis was inadequate, the court held that the City was not required to study remodeling the current Sleep Train Arena as a project alternative in the EIR. The City studied a “no project” alternative involving continued use of the Sleep Train Arena and an alternative that involved building a new arena next to the current arena in Natomas. Both the no project and new Natomas arena alternatives failed to meet most of the City’s objectives for the project to revitalize its downtown area. The remodel alternative suggested by petitioners would have suffered the same problems of location that caused the City to reject the two Natomas-based alternatives. Noting that “infeasible alternatives that do not meet project objectives need not be studied[,]” the court held the Sleep Train Arena remodel alternative did not need to be analyzed.

The court next addressed petitioners’ claim that the EIR’s traffic analysis was defective for failure to adequately analyze interstate traffic on I–5. The EIR studied and disclosed existing problems with the nearby section of I–5 at peak traffic times as well as how the downtown arena project would worsen traffic congestion. The EIR reached the conclusion that levels of service would—at times—reach the worst rating given by Caltrans for traffic flow. Even with proposed mitigation measures, the City acknowledged the adverse impact of the project on I–5 traffic would be significant and unavoidable. While petitioners acknowledged the City did study local I–5 traffic congestion, they argued the study was inadequate for not considering “mainline” I–5 traffic ranging from Canada to Mexico. Rejecting this argument, the court explained that the City was not required to separately study the effect on interstate motorists who will be impacted in the same way as other, local motorists sharing the same section of I–5. The court also noted the EIR did account for mainline traffic because it used the sampling data of mainline freeway traffic collected by Caltrans.

Petitioners also argued the City’s traffic study was deficient because the EIR understated the number of persons who would surround the downtown arena. The court again was not persuaded. The City’s review of crowd size included a national survey of similar entertainment and sports facilities as well as review of crowd sizes during the Sleep Train Arena’s history. The court held that the City did not err “in declining to speculate that the same games played a few miles away would suddenly and inexplicably draw large crowds of persons who would not watch the game but simply mill about in the winter nighttime.”

Addressing petitioners’ final CEQA claim, the court held that petitioners’ contention regarding failure to study post-event crowd safety and potential for violence did not implicate CEQA because petitioners failed to show any potential for environmental impacts. Petitioners argued the EIR both understated the number of persons who can be expected to congregate around the downtown arena as well as their proclivities toward drunken violence. The court ruled that the argument focused on a social issue for which no environmental effect was described.

Finally, regarding petitioners’ attempt to augment the administrative record, the court held that their challenge to the trial court’s denial of their Public Records Act request seeking over 62,000 emails related to communications between the City and the NBA was not properly before the court. Denial of such a request is reviewed only by petition for writ of mandate, not direct appeal. The court also held that petitioners forfeited their argument regarding the introduction of certain additional materials because they failed to offer any meaningful analysis on the issue.

First District Court of Appeal Rejects Challenge to California Air Resources Board’s Regulations Implementing the Cap-and-Trade Program

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The First District Court of Appeal has held the California Air Resources Board (CARB) did not exceed its authority under the California Global Warming Solutions Act of 2006 (2006 Act) in implementing the Compliance Offset Protocols and the early action offset provision of its Cap-and-Trade program. Our Children’s Earth Foundation v. California Air Resources Board, Case No. A138830 (Feb. 23, 2015).

Under the 2006 Act, CARB is required to adopt regulations specifying GHG emission limits and emission reduction measures in furtherance of achieving the statewide GHG emissions limit. The 2006 Act expressly authorizes CARB to adopt regulations establishing market-based compliance mechanisms to reduce GHG emissions. Every CARB regulation adopting GHG emission limits and measures must ensure that GHG emissions reductions are “real, permanent, quantifiable, verifiable, and enforceable” by CARB. (Health & Saf. Code, § 38562, subd. (d)(1).) Those regulations must also ensure that the emissions reduction “is in addition to any greenhouse gas emission reduction otherwise required by law or regulation, and any other greenhouse gas emission reduction that otherwise would occur.” (Health & Saf. Code, § 38562, subd. (d)(2), italics added.) This latter provision is known as the “additionality” requirement.

Pursuant to its authority under the 2006 Act, CARB implemented in January 2012 a Cap-and-Trade program regulation, a market-based compliance mechanism for achieving reductions in GHG emissions. The Cap-and-Trade program imposes a cap on the aggregate GHG emissions that covered entities may emit during the annual compliance period. Covered entities include industries who have previously reported exceedances of emissions above CARB’s threshold established for that industry. CARB enforces the cap by issuing a limited number of compliance instruments known as “allowances,” the total value of which is equal to the cap amount. Subject to limitations, participants can buy, bank, or sell allowances which are used by the covered entities to comply with their compliance obligations.

In March 2012, Appellant Our Children’s Earth Foundation (OCEF) (and another organization who is not a party on appeal) filed a petition for writ of mandate and complaint for declaratory and injunctive relief against CARB. OCEF claimed that CARB’s Compliance Offset Protocols and early offset credit provision violated the additionality requirement of the 2006 Act because they did not ensure the offsets would be truly additional to any GHG reductions that would otherwise occur.

The First District Court of Appeal affirmed the lower court’s denial of the petition. On appeal, OCEF first claimed that CARB exceeded its authority by adopting a market-based compliance mechanism that fails to ensure offset credits are additional to “any” GHG emissions reductions “that otherwise would occur.” The 2006 Act does not define “additional” or “otherwise would occur.” But the 2006 Act does define “market-based compliance mechanism” as including GHG emissions exchanges, banking, credits, and other transactions, governed by rules and protocols to be established by CARB. Within this authority delegated to CARB by the Legislature, the court concluded that CARB appropriately established rules and protocols that ensure additionality with respect to offset credits accepted under the Cap-and-Trade program.

The court also found it problematic that OCEF failed to articulate how a project operator could prove the GHG reduction would not otherwise occur or how CARB could provide the certainty that OCEF claims the 2006 Act demands. Whether a project would have been implemented without the offset incentive can never be proven with absolute certainty. The court found OCEF’s interpretation unworkable and, in practice, would preclude CARB from implementing market-based compliance mechanisms. That result is not what the Legislature intended, the court believed.

The court also rejected OCEF’s claim related to the early offset credit program. OCEF claimed that CARB exceeded its statutory authority by allowing offset credits for projects that were already occurring. According to the court, however, OCEF incorrectly assumed that a project that began before the Cap-and-Trade program was adopted could never satisfy the additionality requirement. That assumption was not supported by the provisions of the 2006 Act itself, which reflected the Legislature’s intention that there could be incentives for voluntary early reductions even before the Act was passed for which CARB could give credit.

Finally, the court considered OCEF’s challenge to the effectiveness of specific measures included in several of the Compliance Offset Protocols. As to this claim, the court made it clear that it would not substitute its judgment for that of the agency regarding CARB’s factual and policy considerations supporting the regulation. Pointing to the record, the court found that evidence substantially supported CARB’s policy decisions in formulating the protocols.

California Supreme Court Establishes Two-Part Test for Determining Whether the “Unusual Circumstances” Exception Applies to a Categorical Exemption

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The California Supreme Court reversed the First District Court of Appeal’s decision that the “unusual circumstances” exception in CEQA Guidelines section 15300.2, subdivision (c), precluded the City of Berkeley’s finding that a single-family residence qualified for a categorical exemption. That section provides that a categorical exemption “shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” The Supreme Court established a two-part test for determining whether the “unusual circumstances” exception applies. Berkeley Hillside Preservation, et al. v. City of Berkeley, et al. (March 2, 2015) __ Cal.4th __, Case No. S201116.

Homeowners in the Berkeley hills applied to demolish their house, and to construct a new, two–floor, 6,478 square-foot house with an attached 3,394 square-foot ten-car garage on a steep lot in a heavily wooded area. The City concluded the proposed project fell within the Class 3 (new construction of small structures) and Class 32 (infill) categorical exemptions. Project opponents hired an engineer who submitted letters stating the grading required would result in unstable conditions and could cause landslides during an earthquake. The homeowners’ engineer submitted a report stating the opponents’ engineer had misread the plans. The City eventually approved the proposed project, relying on the categorical exemptions.

The Court of Appeal concluded that the “unusual circumstances” exception under CEQA Guidelines section 15300.2, subdivision (c), applied. According to the court, if there is a fair argument the project may result a significant impact, then by definition the circumstances are “unusual.” Finding substantial evidence of a fair argument that the proposed residential project may have a significant environmental effect, the court held the proposed project was not categorically exempt. The Court of Appeal ordered the trial court to issue a writ of mandate directing the City to set aside the project approval and its finding of a categorical exemption, and to order preparation of a full EIR. Thereafter, Respondents filed a petition for review in the Supreme Court, which the Court granted on May 23, 2012.

The Supreme Court reversed the Court of Appeal. In the majority opinion, authored by Justice Chin, the Court laid out a two-part test for determining whether the unusual circumstances exception applies. Under the first part of the test, the lead agency must determine whether there are “unusual circumstances,” which the court reviews under the “substantial evidence” standard of review.

Under the second part of the test, if the lead agency determines in the first instance that unusual circumstances exist, the lead agency then considers whether there is a fair argument that the proposed activity may have a significant environmental effect.

In coming to its decision, the Court relied, in part, on the rules governing statutory interpretation requiring that every phrase in a statute (and regulation) be given meaning. The Court turned to the plain text of section 15300.2, subdivision (c), and concluded that the phrase “due to unusual circumstances” has meaning and cannot be read out of the regulation. Thus, the Court of Appeal incorrectly held that a proposed project may have a significant effect on the environment is itself an unusual circumstance rendering the categorical exemption inapplicable.

Justice Liu authored the concurring opinion in which Justice Werdegar joined. The concurring opinion agreed with the Court’s reversal and remand of the appellate court’s decision. Parting ways with the majority, however, Justice Liu disagreed with the Court’s reading of CEQA Guidelines section 15300.2, subdivision (c). The concurring opinion advocated for a one-part test, observing that “‘unusual circumstances’ and ‘significant effects’ have invariably traveled together.” According to the concurring opinion, the phrase “unusual circumstances” in section 15300.2, subdivision (c), “simply describes the nature of a project that, while belonging to a class of projects that typically have no significant environmental effects, nonetheless may have such effects.” Justice Liu thus concluded that the standard of review is limited to whether substantial evidence supports a fair argument that the project will have significant environmental effects.

The majority acknowledged that evidence that the project will have a significant effect does tend to prove that some circumstance of the project is unusual. The majority also explained that in considering the first part of the test, the lead agency has “discretion to consider conditions in the vicinity of the proposed project.” The Court stated that the appellate court had erred in determining that the unusual circumstances inquiry excludes consideration of typical circumstances in a particular neighborhood. Beyond that, though, the Court provided little guidance on the legal test for what constitutes “unusual circumstances.”

The Court also addressed the proper remedy on remand. Relying on Public Resources Code section 21168.9, the Court stated that on remand the Court of Appeal could order preparation of an EIR only if it found that neither of the categorical exemptions applied and if the City lacked discretion to apply another exemption or to issue a negative declaration.

 

Note: The opinion was modified on May 27, 2015. These changes do not affect the result of the case.

EPA Releases Final Wetland Connectivity Report Clarifying “Significant Nexus”

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The US EPA recently released the final draft of its report on the Connectivity of Streams and Wetlands to Downstream Waters. The purpose of the report is to summarize current scientific understanding about the connectivity and mechanisms by which streams and wetlands affect the physical, chemical, and biological integrity of downstream waters. The focus of the review is on surface and shallow subsurface connections of small or temporary streams, nontidal wetlands, and certain open waters. The report stresses that it neither considers nor sets forth legal standards for Clean Water Act (CWA) jurisdiction, nor does it establish EPA policy.

In 2006, the US Supreme Court decided Rapanos v. United States, where it held that a geographically isolated body of water can be regulated under the CWA only if it has a “significant nexus” to “navigable waters” of the United States. The meaning of “significant nexus” was never clarified. The report on connectivity is meant, in part, to provide insight on this question.

According to the report, scientific evidence “unequivocally” demonstrates that streams, individually or cumulatively, exert a strong influence on the integrity of downstream waters. EPA found that wetlands and open waters in riparian areas and floodplains are physically, chemically, and biologically integrated with rivers via functions that improve downstream water quality. These functions include: the temporary storage and deposition of channel-forming sediment and woody debris; recharge of groundwater sustaining river baseflows; storage of floodwater; retention and transformation of nutrients, metals, and pesticides; and export of organisms or reproductive propogating materials to downstream waters. In addition to providing effective buffers to protect downstream waters from point source and nonpoint source pollution, wetlands and open waters form integral components of river food webs, providing nursery habitat for breeding fish and amphibians, colonization opportunities for stream invertebrates, and maturation habitat for stream insects.

The report recognizes that watersheds are integrated at multiple spatial and temporal scales by flows of surface water and groundwater, transport, transformation of physical and chemical materials, and movements of organisms. Connectivity of streams and wetlands to downstream waters occurs along a continuum that can be described in terms of frequency, duration, magnitude, timing, and rate of change of biotic fluxes to downstream waters. Variations in the degree of connectivity influence the range of functions that streams and wetlands provide. Thus, the incremental effects of individual streams and wetlands are cumulative across entire watersheds and must be evaluated in the context of other streams and wetlands.

Third Appellate District Upholds Department of Fish and Wildlife EIR, But Finds Department Violated APA in Adopting Underground Regulations

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The Third District Court of Appeal held that the California Department of Fish and Wildlife’s program EIR analyzing the Department’s statewide fish hatchery and stocking enterprise passed muster. The Department did not abuse its discretion in the manner it organized the EIR, analyzed the project, and mitigated numerous impacts. The court also found, however, that the Department had violated the Administrative Procedure Act (APA) by adopting three mitigation measures, which imposed new obligations on private aquaculture facilities and required the Department to perform new duties, without complying with APA procedures. Center for Biological Diversity v. Dept. of Fish and Wildlife (Feb. 10, 2015) ___ Cal.App.4th ___, Case No. C072486.

The Department operates 14 trout hatcheries and 10 salmon and steelhead hatcheries throughout the state, stocking fish at close to 1,000 locations each year. After CEQA’s enactment, the hatching and stocking enterprise was found categorically exempt from complying with CEQA. Subsequently, concerns arose regarding the enterprise’s impact on native and wild animals due to predation and genetic hybridization. To address these concerns, the Department developed aquatic biodiversity management plans and hatchery genetic management plans. Center for Biological Diversity sued the Department in 2006, and the trial court agreed with the Center that the enterprise was not categorically exempt from CEQA because it likely caused significant environmental impacts. The court in this prior suit ordered the Department to prepare an EIR and comply with CEQA.

The Department prepared a broad-scope, program EIR/environmental impact statement pursuant to that decision and to additionally comply with NEPA. The EIR analyzed the statewide hatchery and stocking enterprise, as well as three other programs, including the Fishing in the City Program (providing fishing opportunities in urban areas), and the Private Stocking Permit Program (authorizing fish stocking by private aquaculture facilities in private and public lakes and ponds). The Department selected operations from 2004 to 2008 as the baseline and identified more than 200 impacts on biological resources. The EIR proposed a number of mitigation measures to lessen these impacts, and laid out three project alternatives. The EIR did not consider closing the hatcheries or eliminating trout stocking as alternatives.

The Department’s EIR was challenged by the Center and other plaintiffs representing environmental interests in two separate CEQA suits, with plaintiffs representing recreational fishing interests bringing a third suit under the APA. The trial court upheld the EIR and found no violations of the APA. The appellate court affirmed in part and reversed in part.

First, the Third District addressed the EIR’s level of analysis. The CEQA Guidelines do not specify the level of analysis required to be performed in a program EIR. Rather, the Guidelines require an EIR to provide sufficient information in light of what is reasonably feasible. The court found the EIR satisfied that standard. The document reviewed and analyzed the hatchery and stocking enterprise specifically and comprehensively, but within reason, providing for further environmental review where warranted. Given the nature and statewide scope of the project and the consistency of its impacts across the state, the court found the analysis adequate to serve as a program EIR that also operated as project EIR. No additional site-specific environmental review was required given the agency’s determination that site-specific impacts were sufficiently addressed in the program EIR, and there were no new impacts. Indeed, that is the function of a program EIR.

The court also found the EIR did not impermissibly defer formulation of mitigation measures, as it provided sufficient performance standards for future mitigation to meet. The court noted that the rule prohibiting deferred mitigation prohibits loose or open-ended performance criteria. Here, in contrast, the EIR’s performance standards were sufficient to inform the Department what it had to do and accomplish, and committed the Department to mitigating impacts before proceeding with the enterprise. The performance standards were sufficient to ensure the aquatic biodiversity management plans would mitigate impacts in mountain lakes to insignificance. The Department also relied upon federal regulations to develop mitigation measures for impacts on anadromous fish.

The court held that the Department properly used the existing enterprise as the environmental baseline. The court rejected the Center’s contention that the EIR must use the existing environmental conditions—absent the project—as the baseline. It noted that though the origin of present conditions may interest enforcement agencies, such information is irrelevant to CEQA baseline determinations. The CEQA baseline must include existing conditions even when those conditions have never been reviewed and are unlawful. Furthermore, despite using the existing enterprise as the baseline, the EIR described, as much as reasonably possible the impacts hatcheries and stocking have had statewide on the environment from the enterprise’s inception more than a century ago, and proposed mitigation for those continuing impacts. Thus, the EIR did exactly what the Center sought.

Finally, the court held the EIR considered an adequate range of alternatives. For the no project alternative, the EIR considered the baseline project—continuation of the existing enterprise without making any changes. The court upheld this decision, noting that where the EIR is reviewing an existing operation or changes to that operation, the no project alternative is the existing operation; it is a factually based forecast of the environmental impacts of preserving the status quo. The court rejected the Center’s argument that the no project alternative should have been the elimination of the stocking enterprise, stating that the EIR is not the approval of a new program, but review of an ongoing one. The Department was not required to analyze the alternative scenario of discontinuing its hatchery and production enterprise, as it had no legal authority to implement a no-stocking alternative.

Turning to the APA contentions, the court concluded that three mitigation measures imposed by the Department were underground regulations, i.e., regulations adopted without complying with the notice and procedure requirements imposed by the APA. The mitigation measures at issue were: MM BIO-226 (Implement Private Stocking Permit Evaluation Protocol), MM BIO-229 (Require and Monitor Invasive Species Controls at Private Aquaculture Facilities), and MM BIO-233b (Implement Private Stocking Permit Evaluation Protocol). The court found that the measures fell within the definition of a “regulation” and were not exempt from APA requirements. The court rejected the Department’s argument that MM BIO-226 was exempt as a regulation relating “only to the internal management of the state agency,” and that MM BIO-229 and MM BIO-233b were exempt as regulations that embody the “only legally tenable interpretation of a provision of law.” In particular, the court concluded that MM BIO-226 required the Department to “perform a new duty” and MM BIO-229 imposed on a “class of persons a new affirmative duty.” The court’s application of the APA to mitigation measures in a state agency’s EIR appears to be a first and could have far-reaching implications on other EIRs studying statewide activities.

City Council Member’s Appeal of Planning Commission Decision Violated Principles of Fairness and the Newport Beach Municipal Code

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In Woody’s Group, Inc. v. City of Newport Beach, the Fourth District Court of Appeal, Division 3, reversed the trial court’s decision denying a writ of administrative mandamus and held that the City Council of Newport Beach violated principles of fairness in overturning a permit application approved by the city’s planning commission.

Woody’s Warf (“Woody’s”) is a long-established restaurant overlooking the harbor in Newport Beach. In 2013, the Newport Beach Planning Commission voted to approve a conditional use permit to allow Woody’s to have a patio cover, remain open until 2 a.m. on weekends, and allow dancing in the restaurant. Four days after the planning commission’s decision, a member of the Newport Beach City Council filed an appeal of the planning commission’s decision because the council member “strongly believe[d]” the conditional use permit was inconsistent with the city’s general plan. Following a “lively” public meeting, in which the council member who filed the appeal presented a lengthy presentation on why the planning commission’s decision should be overturned, the city council voted to reverse the planning commission’s decision.

Woody’s thereafter filed with the Orange County Superior Court a petition for a writ of administrative mandate with the superior court, seeking to set aside the city council’s decision. The trial court denied the writ. The Court of Appeal reversed.

The Court of Appeal first held that Woody’s had established an “‘unacceptable probability of actual bias”’ on the part of the council member that filed the appeal. According to the court, the council member’s notice of appeal “showed he was strongly opposed to the planning commission’s decision on Woody’s application” – that is, he took a position against the project. Furthermore, the court explained, the council member’s speech to the council had been written out beforehand, “wholly belying his own self-serving comment at the hearing that “‘I have no bias in this situation.’” Therefore, the court held, the council member should not have been part of the body hearing the appeal.

Second, the court held that the appeal did not meet the procedural requirements of the city’s municipal code, and therefore should not have been brought. The city argued that the city had a “policy and practice” of allowing council members to appeal the planning commission’s decision. This argument was not well taken by the court. As the court explained: “The City violated the rules laid down in the city’s own municipal code, then purported to exempt itself from that code by invoking some previously undocumented custom of ignoring those rules when it comes to council members themselves. Needless to say, changing the rules in the middle of the game does not accord with fundamentally fair process.”

 

SB 4 Implementation to Yield New Permanent Regulations, an EIR, and an Independent Scientific Study by July 2015

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Senate Bill 4 (SB 4), which was sponsored by Senator Fran Pavley and signed into law on September 20, 2013, requires state agencies to complete three main tasks in creating a comprehensive regulatory program for oil and gas well stimulation treatments: (1) adopt new temporary and permanent regulations, (2) prepare an EIR on well stimulation as conducted in California, and (3) conduct an independent scientific study. In 2014, several Public Resources Code sections added by SB 4 were amended by Senate Bill 861. The main substantive requirements of SB 4 discussed below are now found in the amended versions of Public Resources Code sections 3160 and 3161.

On the regulatory track, SB 4 required the Department of Conservation and its Division of Oil, Gas, and Geothermal Resources (DOGGR) to propose and adopt new permanent regulations specifically addressing well stimulation treatments such as hydraulic fracturing and acid matrix stimulation. The proposed regulations and subsequent revisions were available for public comment during three separate periods between November 2013 and October 2014. The Office of Administrative Law approved the finalized  permanent regulations on December 30, 2014, but they will not take effect until July 1, 2015 pursuant to Public Resources Code section 3161, subdivision (a). At that time, numerous sections will be added to title 14 of the California Code of Regulations, which require operators conducting well stimulation treatments to, among other things:

  • Evaluate the well and surrounding area to ensure the integrity of the well and the geologic and hydrologic isolation of the oil and gas formation during and following well stimulation treatment (sections 1782, 1783, 1783.1, 1784, 1784.1, 1784.2, 1785, 1787);
  • Monitor for seismic activity in the area during and after hydraulic fracturing (section 1785.1);
  • Provide notice to neighboring land owners and tenants of an approved well stimulation permit and notice of those parties’ opportunities for water sampling and testing (section 1783.2, 1783.3).

Because the prescribed rulemaking process that allows for public comment and multiple revisions takes longer than a year, SB 4 required DOGGR to implement interim emergency regulations, which will remain in effect until July 1, 2015 when the final permanent regulations go into effect.

On the CEQA track, SB 4 requires DOGGR to prepare an EIR in order to study potential environmental impacts from well stimulation treatments. The Draft EIR, in an effort to supplement the proposed regulations, includes mitigation measures that can be applied as needed to different well stimulation permit applications in different regions. On January 14th, the Department of Conservation and DOGGR published a Draft EIR titled “Analysis of Oil and Gas Well Stimulation Treatments in California.”

As directed by Public Resources Code section 3161, the EIR analyzes potential impacts of hydraulic fracturing and other well stimulation treatments, though not all oil and gas recovery operations, throughout the state of California. Though not expressly required by statute, the “Project” analyzed in the EIR includes implementation of Water Recycling Standards, Habitat Protection Standards, Surface Water Protection Standards, and Groundwater Protection Standards. On top of these protective standards, the EIR proposes a plethora of mitigation measures for potentially significant impacts. The EIR also includes comparative analysis of six alternatives, including a No Future Well Stimulation Treatment Alternative and an Active Fault Zone Restrictions Alternative. The public is invited to review and submit written comment on the Draft EIR from January 14, 2015, till March 16, 2015. During the comment period, interested parties can also attend six public comment meetings throughout the state to provide verbal and written comments on the Draft EIR. SB 4 requires the Department of Conservation and DOGGR to certify a Final EIR by July 1, 2015.

Kern County, where a majority of the state’s well stimulation activity will likely occur, is in the process of preparing its own EIR on oil and gas exploration, extraction, operations, and production activities in unincorporated Kern County. In particular, the County’s EIR will study potential impacts from proposed amendments to the County’s Zoning Ordinance, Title 19, Chapter 19.98 (Oil and Gas Production). This EIR will address well stimulation treatments as one of several oil and gas exploration activities. Although there is no official release date for Kern County’s Draft EIR, it will likely be made available to the public in the first half of 2015.

Finally, SB 4 balances the regulatory and CEQA efforts with an independent scientific assessment of well stimulation. The California Natural Resources Agency commissioned the California Council on Science and Technology (CCST) and Lawrence Berkeley National Laboratory (Berkeley Lab) to conduct an independent scientific assessment of well stimulation in California. An interdisciplinary steering committee oversees the study, with Dr. Jane C.S. Long serving as the science lead and the Berkeley Lab serving as the primary research institution supporting CCST in the scientific assessment. The final report will undergo vigorous peer review.

On January 14, 2015, CCST released Volume I of the study to the public. Volume I is titled “An Independent Scientific Assessment of Well Stimulation Technologies in California: Well Stimulation Technologies and their Past, Present, and Potential Future Use in California.” As the first of three volumes, it describes well stimulation treatments; how they are generally conducted and how they are practiced in California; and where they have been and are being used for oil and gas production in the state. Volumes II and III will be released in July 2015. Volume II will assess potential impacts to water, air quality, greenhouse gas emissions, induced seismicity, biological resources, traffic, and noise. Volume III will present case studies to assess specific geographic regions.

Implications

When New York Governor Andrew Cuomo and his administration announced on December 17, 2014, that his state will soon adopt a complete ban on High-Volume Hydraulic Fracturing (HVHF) as a well stimulation technique in New York, activists called for California to adopt a similar statewide ban. The information in DOGGR’s Draft EIR makes clear that the picture is not so black and white. First, the Governor cannot single-handedly ban an activity that is currently allowed under applicable statutes. Second, how hydraulic fracturing and well stimulations are conducted varies from state to state, depending on local geologic attributes. For example, the Marcellus Shale in New York is significantly different from California’s Monterey Shale, which poses geologic challenges that led to the federal  Energy Information Administration dramatically reducing its estimates of recoverable oil in the Monterey Shale from much higher 2012 estimates. Finally, the New York Department of Health’s conclusions about significant public health concerns relating to HVHF in New York cannot be broadly applied to hydraulic fracturing activities in other states. Each state, including California, will need to evaluate how well stimulation is conducted within the state and the adequacy of state regulations and permit conditions to address public health and environmental concerns. The requirements in SB 4 ensure that this evaluation in California will be thorough. Thus, prudent and concerned members of the public should engage in the public review process provided by CEQA to strengthen the protective measures proposed in DOGGR’s EIR.

 

DWR Increases Water Deliveries to State Agencies

General Posted by   

As California enters its fourth year of drought, the Department of Water Resources (DWR) is increasing the amount of State Water Project (SWP) water allocated to state agencies by 5 percent—from 10 percent of the requested amount to 15 percent. This translates to a total allocation of 635,759 acre-feet annually to 29 agencies, compared to the requested 4,172,686 acre-feet. DWR is able to make this increase thanks to early-December storms that raised reservoir water levels. Last year at this time, no water was initially allocated.

DWR states that this allocation is consistent with the long-term water supply contracts and public policy. DWR considered several factors prior to settling on this increase, such as existing storage, operational constraints (i.e., potential harm to endangered fish), and contractor demands. DWR may revise the allocations over the course of the year based on changing water supply and sustainability conditions.

The two largest regions in terms of water received are the San Joaquin Valley at 170,035 acre-feet, and Southern California at 394,433 acre-feet.

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