California’s groundwater will be regulated for the first time under a package of three bills signed by Governor Jerry Brown on September 16, 2014. Together, the bills  establish the “Sustainable Groundwater Management Act” and impose mandates aimed at overseeing and managing California’s groundwater on a sustainable basis into the future. The California Legislature passed the historic legislation on August 29, 2014.

Until now, California was the only state in the nation that did not comprehensively manage and regulate its groundwater. The state could regulate water diverted from reservoirs and above-ground streams, but did not have authority to limit underground pumping prior to the new legislation’s passage and signing by the governor. According to a recent report by the California Water Foundation, groundwater is used to meet 40 percent of the state’s water demands in an average water year. That number can rise to 60 percent or more during droughts such as the one currently gripping the state. A recent study by the California Department of Water Resources revealed that extractions are exceeding replenishment rates in many places, resulting in unsustainable drainage of underground aquifers.

The bill package includes AB 1739 by Assemblymember Roger Dickinson (D-Sacramento), and SB 1168 and SB 1319 by Senator Fran Pavley (D-Agoura Hills). The legislation focuses on local and regional control of groundwater supplies, with eventual direct state intervention if local management falls short. The new act assigns local agencies the authority and responsibility for managing the groundwater basins upon which they rely through various investigative, regulatory, and enforcement tools. “Backstop” provisions allow the State Water Resources Control Board to develop interim plans for basins when local communities fail to prepare or enforce their plans. The legislation expressly states that local agencies and the state must respect all existing rights to surface water and groundwater.

Under the Act, the Department of Water Resources is tasked with ranking groundwater basins as high, medium, low, or very low priority to characterize the seriousness of groundwater problems. Local and regional agencies with “high” or “medium” priority basins that also have critical overdraft conditions must adopt “groundwater sustainability plans” by 2020. Basins ranked high or medium but without critical overdraft conditions must adopt such plans by 2022. In basins ranked as low and very low priority, sustainability plans are optional. “Sustainability” is characterized as the volume of water  that can be pumped without causing long-term problems such as degraded water quality or significant and unreasonable supply depletion. The plans, in limiting groundwater extractions, must also take into consideration economic, social and environmental effects. Sustainability plan approvals are exempt from CEQA.

Senator Pavley’s SB 1168 contains provisions related to local and regional agencies and the creation of sustainability plans. Assemblymember Dickinson’s AB 1739 contains complementary provisions for state intervention where local and regional agencies fail to comply with the new act. Pavley’s SB 1319 amends AB 1739 to place certain limitations on the state’s enforcement authority. The bills were designed to function in tandem, and all three needed to be signed by the governor for the new act to become operative.

To read the bills and related analyses, go to http://www.leginfo.ca.gov/.

The California Water Foundation report can be viewed here.

The DWR study can be viewed here.

Under Public Resources Code section 21167.6, petitioners may elect to prepare the administrative record in a CEQA proceeding. Petitioners Coalition for Adequate Review and Alliance for Comprehensive Planning chose to prepare the record of proceedings in this case. The court held the City could recover most of its reasonable record preparation costs even though petitioner had elected to prepare the record. Coalition for Adequate Review v. City and County of San Francisco (Sept. 15, 2014) Case No. A135512.

The trial court held on the merits in favor of the City. The City then filed a memorandum of costs, seeking $64,144 for the administrative record, a professional messenger, and service. The City had certified the record in part, claiming it was incomplete due to petitioners’ failure to include statutorily required documents. The City then added these documents to the record. The trial court concluded that because it was the City that had sought to supplement the record, the City should bear that cost. The court further held that petitioners’ discovery requests had not been extraordinary and were not the but-for cause of the City’s costs, and that granting the City’s cost request would chill future petitioner litigation. The appellate court reviewed the issue de novo.

The issue before the court was whether petitioners’ election to prepare the record precluded an award of record preparation costs to the City. The court held that a petitioner’s election to prepare the record does not preclude a public agency from recovering supplemental record preparation costs when incurred to ensure a statutorily complete record. Section 21167.6, subdivision (b)(2) contains no ipso facto prohibition on the recovery of record preparation costs by a public agency. The court stated that in order for an agency to recover costs, circumstances need not be extraordinary, as was the case in St. Vincent’s School for Boys, wherein the city was required at petitioner’s request to locate more than 58,000 pages of documents. A public agency need not put itself at risk of a statutorily incomplete record, the court opined.

The court disagreed that its holding would have a chilling effect on CEQA challenges, as section 21168 expressly provides for the prevailing party to recover costs of record preparation. Furthermore, the parties, and not the public agency, pay the costs, and thus public monies are not used to fund CEQA challenges brought by private parties.

The court then delved into the reasonableness of specific cost items. It disallowed paralegal costs related to the supplemental record where those costs were expended to ensure “completeness” of the record. Public agencies face this chore every time a petitioner elects to prepare the record, and to allow potentially sizeable recoveries for the task would undermine the statutory scheme for controlling the costs of record preparation. The court found that labor costs of assembling the record, production of excerpts of the record, messenger fees, overnight service fees, and the city’s copy of the record prepared by petitioners were all potentially recoverable, and remanded these costs to the trial court for a reasonableness determination. Planning department labor costs to locate documents provided to petitioners, however, were not recoverable here as they “did not approach the egregious abuse the occurred in St. Vincent’s School.”

The Fifth District Court of Appeal addressed two main issues under CEQA: (1) delegation of a lead agency’s authority, and (2) the standard of review to apply when reviewing an agency’s characterization of a resource as historical or not. (Citizens for the Restoration of L Street v. City of Fresno (Aug. 29, 2014) Case No. F066498.)

The City of Fresno approved infill construction of 28 two-story townhouses on about 1.25 acres of land in the city’s downtown area. Two old houses—constructed in 1906 and 1910—were located on the project site. One house was a designated Heritage Property by the Preservation Commission, and the other house had no historical designation. Both were in a significant state of disrepair and had lost considerable integrity as historical structures. As a result, the Commission determined the homes were not worth preserving; indeed, the homes were offered for sale for one dollar each, and no buyers showed interest. So, as part of the infill project, the city proposed issuing demolition permits for the two structures.

The city prepared an initial study and mitigated negative declaration for the infill project, and issued a notice of intent to adopt the MND in June 2011. The notice did not identify the necessity of development permits or the decisionmaking body approving the demolition, or discuss that the Preservation Commission would have any role in the CEQA review process. The Preservation Commission took the lead in the certification of the MND and determined the two buildings on the project site were not historic. The Commission also certified the MND. Citizens appealed this decision to the City Council, which upheld the Commission’s certification. Citizens filed suit.

The Delegation Issue

On appeal, Citizens renewed its successful argument from below that the Preservation Commission did not have the authority to act as the city’s decisionmaking body for the purpose of certifying the MND. The appellate court turned to the city’s municipal code for guidance to determine if the Commission could be characterized as the decision-making body under CEQA Guidelines § 15356. The court determined that the municipal code did not explicitly grant the Commission the authority to approve the environmental review documents concurrently with the other project-related approvals (though the court noted that the city could adopt such an ordinance expressly granting the Commission this authority).

Due to the structure of the city’s municipal code and the approval process here, the court concluded that the city improperly split responsibility for approval of the project and certification of the environmental review. When this project was on appeal to the city council, the city council was not reviewing the demolition permits or CUPs issued for the project by the Preservation Council. Instead, the city was only reviewing the Commission’s decision to certify the MND. Therefore, the city council was not acting as the final, independent decisionmaking body for the project and the MND, as CEQA requires. The court also found the city’s notice for the public review period of the MND to be inadequate. Finally, the court determined that the city council did not explicitly address and adopt the findings required by CEQA Guidelines section 15074, and Public Resources Code section 21082.1.

The Historic Resource Designation Issue

On the issue of the appropriate standard of review to apply to an agency’s characterization of a building or site as historical or not, the court sided with the city. The court, relying on its prior analysis in Valley Advocates v. City of Fresno (2008) 160 Cal.App.4th 1039, concluded that the substantial evidence standard of review applied. Citizens urged the court to apply the fair argument standard instead.

Citizens suggested that the city’s characterization of the buildings should be reviewed under the fair argument standard because the city adopted a MND, which is reviewed under the fair argument standard. But the court explained that the Legislature adopted a specific section in CEQA (§ 21084.1) addressing historical resources. Final discretionary decisions about whether a building or site is historical are to be made during the early stages of environmental review, and since the Legislature allowed lead agencies to make discretionary decisions regarding the historic significance of resources before preparing CEQA review, application of the fair argument standard in these situations would be contrary to Legislature’s intent. An agency cannot freely exercise discretion when taking action if courts review that action as a matter of law, like under the fair argument standard. For these reasons, the court affirmed the application of the substantial evidence test to the city’s determination that the project would have no impacts on historical resources.

Conclusions and analysis

This case follows other recent cases where courts have faulted lead agencies for splitting approval of project elements, such as CUPs or permits, from certification of the project’s environmental analysis. Interestingly, the Fifth District declined to note that the bifurcated situation in this case was created by Citizens’ failure to appeal both the demolition permits and the MND to the city council. But even though Citizens only appealed the MND, arguably failing to exhaust its administrative remedies on the other issues, the court still held the city responsible for the procedural error in the approval process. This outcome sends a clear warning to lead agencies to be vigilant about ensuring the final, decisionmaking body has the discretionary authority to act on project approvals and the project’s environmental review document. The decision also affirms the Fifth District’s prior analysis in Valley Advocates with regard to agency determinations of whether buildings or sites are historic.

The controversy in this case arose after the City of San Diego declined to approve conditional use permits (CUPs) for three cell tower facilities operated by American Tower Corporation. The city had previously granted 10-year CUPs for the facilities, and American Tower applied for new CUPs after the originals expired. The city considered the applications and informed American Tower of concerns with the design of the facilities, particularly with regard to aesthetic impacts, but otherwise determined that the applications were exempt from CEQA. The city ultimately denied the CUP applications. American Tower then filed suit in federal district court, raising claims under California’s Permit Streamlining Act. American Tower Corp. v. City of San Diego (Aug. 14, 2014) Case No. 11-56766.

California’s Permit Streamlining Act

Under California’s Permit Streamlining Act, the city was required to act on the CUP applications within 60 days of the city’s exemption determination. The city did not meet this deadline, and American Tower argued that the CUP applications became approved as a matter of law based on the city’s failure to act within 60 days. The district court found this argument compelling, but the Ninth Circuit reached a contrary conclusion.

The Ninth Circuit noted that the Permit Streamlining Act causes a CUP application to become approved by default only if two conditions are met: the lead agency must fail to take action within 60 days and public notice, as required by law, must have occurred. In this case, the appellate court concluded that the required public notice had not occurred, so the CUP applications could not be deemed approved.

To determine whether public notice had occurred prior to the CUP approvals, the appellate court looked to statutory provisions of the San Diego Municipal Code and the constitutional, due process protections articulated by the California Supreme Court in Horn v. County of Ventura. The court determined that the city complied with the notice requirement, so the issue became whether automatic approval of the CUP applications without an opportunity for affected landowners to be heard would “constitute a substantial or significant deprivation of other landowners’ property interests” under the framework established in Horn.

The Ninth Circuit determined that adjacent property owners might be concerned about the visual impacts of the sizable cell towers and hundreds of square feet of adjacent equipment shelters allowed by the CUPs. Therefore, the court had “little trouble” finding that automatic approval of the CUP applications would significantly infringe upon other landowners’ property interests. The City’s notices were silent on the Permit Streamlining Act default approval provision, and American Tower failed to make use of the act’s self-help provisions. Under the act, an applicant may either file an action in court to compel the lead agency to provide public notice and hearing, or the applicant may file its own public notice of the proposed action. So in this case, for example, American Tower could have filed a public notice that the CUP applications would be deemed approved if the city failed to act within 60 days after finding the CUPs exempt from CEQA. But no notice was provided to affected landowners here, so the CUP applications could not be deemed automatically approved under the act.

The Federal Telecommunications Act

American Tower advanced multiple claims under the Federal Telecommunications Act, all of which both the district court and the Ninth Circuit rejected.

Under the Telecommunications Act, a state or local agency must support decisions to deny placement of telecommunications equipment with substantial evidence, measured in the context of applicable state and local law. In this case, the San Diego Municipal code requires that CUP applications comply with, “to the maximum extent feasible,” regulations of the local land development code. American Tower failed to prove that its proposed facilities were designed “to be minimally invasive,” despite being given numerous opportunities by the city’s planning department to submit such evidence. As a result, the court found that the city supported its decision to reject the CUP applications with substantial evidence.

The Ninth Circuit also agreed with the district court that American Tower and the city were not “similarly situated” for the purposes of analyzing whether the city unreasonably discriminated against American Tower. The court noted that while the city maintained telecommunications equipment, this equipment was predominately for public services. Further, the city did not advertise available wireless space, though it did maintain some private leases, so any evidence of competition between the city and American Tower was minimal. In any event, the court found that the alleged discrimination in this case would be reasonable. The Telecommunications Act only prohibits unreasonable discrimination. Since aesthetic concerns are legitimate concerns for a locality, it was not unreasonable for the city to reject the CUP applications based on those concerns.

Finally, the Ninth Circuit held that American Tower did not support a claim under the Telecommunications Act, which mandates that regulation of telecommunications equipment not prohibit the provision of wireless services. An applicant must demonstrate that the manner in which it proposes to fill a significant wireless services gap “is the least intrusive on the values that the denial sought to serve.” Here, the city denied the CUP applications based on aesthetic concerns, and American Tower failed to meet its burden by submitting evidence that the proposed towers and structures were the least intrusive proposals.

Analysis and Conclusion

This opinion applies state law to a common, and sometimes contentious, local land-use planning issue: permitting the placement of telecommunication equipment. The case notes the limits on the power of the Permit Streamlining Act to provide default approval of a permit application, and the court implicitly encourages applicants to make use of the act’s self-help provisions in instances where lead agencies are uncooperative. This case also demonstrates the importance local regulations in the permitting and placement of telecommunications equipment.