Archives: August 2021

Fifth District Court of Appeal Excuses Petitioner’s Failure to Exhaust Administrative Remedies, Holds that Unlined Landfills are Not “Facilities” for Purposes of the Class 1 Categorical Exemption

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In the published portions of Los Angeles Department of Water and Power v. County of Inyo (2021) 67 Cal.App.5th 1018, the Fifth District Court of Appeal held that the issue exhaustion requirement in Public Resources Code section 21177, subdivision (a) did not apply where the County of Inyo did not provide adequate public notice prior to adopting a Notice of Exemption (NOE) and that the County abused its discretion in finding that condemning three landfill sites was categorically exempt from CEQA under the “existing facilities” exemption in CEQA Guidelines section 15301 (the “Class 1” categorical exemption).

FACTUAL AND PROCEDURAL BACKGROUND

Beginning in the 1950s, the County began leasing land within the County owned by the Los Angeles Department of Water and Power (LADWP) for waste management purposes. At issue in this case were three sites leased by the County for use as unlined landfills. The County’s operation of the landfills is subject to permitting by the California Department of Resources Recycling and Recovery (CalRecycle). Beginning in 2012, the County sought to amend the permits for two of the three landfill sites to increase the permissible daily usage, overall capacity, and to accelerate the closure dates, effectively shortening the useful life of the landfills.

After negotiating with LADWP to extend the lease agreement for one of the sites, the County determined that acquiring all three landfill sites through condemnation was necessary. In a letter to the Board of Supervisors, LADWP objected to the County’s decision, in part, arguing that that the County was required to comply with CEQA before taking any action on the proposed condemnation. At the Board hearing on the condemnation proposal, County staff suggested that the Board’s actions would be exempt from CEQA review for several reasons, including the “existing facilities” categorical exemption under CEQA Guidelines section 15301. The Board approved the condemnation proceedings, but its written decision made no mention of CEQA.

LADWP filed suit. The Kern County Superior Court ruled that the County violated CEQA and issued a writ of mandate directing the County to rescind its resolutions relating to the condemnation proceedings, pending compliance with CEQA. The County appealed.

THE COURT OF APPEAL’S DECISION

Before turning to the merits of LADWP’s CEQA claims, the Court of Appeal addressed the “threshold procedural issue” of whether LADWP’s CEQA claims were barred because it failed to exhaust its administrative remedies with respect to the issues that it raised in court. After discussing the statute and relevant case law, the court acknowledged that because CEQA did not require a comment period prior to determining that a project is exempt from CEQA, the relevant question was whether the agency provided adequate notice to the public prior to considering an exemption. Specifically, the court explained, an agency’s notice must inform the public that the agency will consider a CEQA exemption; otherwise, the issue exhaustion requirement in Public Resources Code section 21177, subdivision (a), does not apply. Here, the court found that the first mention of CEQA and the Board’s consideration of an exemption was made by staff during the hearing, and the hearing notice was silent on CEQA. The court concluded that the public was not provided with adequate notice regarding the exemption, and therefore, LADWP was not required to exhaust on its CEQA challenges to the County’s exemption determination.

Turning to the exemptions relied on by the County, the court found that because the issues before it involved the scope of the “existing facilities” categorical exemption and statutory construction, review of the County’s actions was de novo. After reviewing the language of CEQA Guidelines section 15301, the court concluded that the term “facilities” is ambiguous, agreeing with the Second District Court of Appeal in Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal.App.4th 1165 (Azusa). Further agreeing with Azusa, the court reasoned that, because an unlined landfill was “excavated” rather than “built,” an unlined landfill was more akin to an alteration in the condition of land rather than a facility. The court reasoned that because section 15301 was revised following the Azusa decision but did not expressly mention landfills, the court concluded that the Secretary of Resources who issued the revised Guideline must have agreed with Azusa that unlined landfills are not a class of projects that do not have a significant effect on the environment. Thus, the court concluded that the County abused its discretion in finding the condemnation proceedings categorically exempt under the Class 1 categorical exemptions.

– Nathan O. George

First District Court of Appeal Holds That Governor Newsom’s Certification of Oakland Howard Terminal Project Under AB 734 Was Timely

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In Pacific Merchant Shipping Association v. Newsom (2021) 67 Cal.App.5th 711, the First District Court of Appeal held that there was no deadline for the Governor to certify the Howard Terminal Project as qualifying for expedited judicial review under Assembly Bill (AB) 734, and specifically, that the Howard Terminal Project was not subject to the certification deadline in the Jobs and Economic Improvement Through Environmental Leadership Act of 2011 (AB 900).

FACTUAL AND PROCEDURAL BACKGROUND

The Howard Terminal Project is a proposed development located at Oakland’s Howard Terminal. It includes a new baseball stadium for the Oakland A’s, as well as residential, retail, commercial, and other uses.

In 2018, the Legislature passed AB 734, which provided that, if the Governor certified that the Howard Terminal project met specific environmental standards, then litigation challenging the project’s environmental review would be subject to expedited judicial review. AB 734 was a stand-alone bill applicable solely to the Howard Terminal project. In many respects, AB 734 was modeled after separate legislation, generally referred to as AB 900, providing for expedited judicial review of “Environmental Leadership Development Projects” (ELDP projects).

First enacted in 2011, the Legislature has amended AB 900 several times, in part to extend various deadlines embedded in the statute. In September 2018, when the Legislature enacted AB 734, AB 900 provided that the Governor had to certify a project by January 1, 2020, and the lead agency had to approve the project by January 1, 2021, when AB 900 would sunset. AB 900 also authorized the Governor to adopt guidelines to implement the statute. The Governor’s AB 900 guidelines reflected AB 900’s deadlines.

AB 734 provided that the Governor’s AB 900 guidelines apply to the “implementation” of AB 734 “to the extent the guidelines are applicable and do not conflict with specific requirements” of AB 734. Unlike AB 900, AB 734 did not specify any deadlines in the text of the statute.

Shortly after the Legislature adopted AB 734, Governor Newsom amended his AB 900 guidelines to reference AB 734 and the Howard Terminal project, along with a different project – the Los Angeles Clippers’ proposed basketball arena in Inglewood – subject to its own, stand-alone, fast-track legislation (AB 987) that contained a similar reference to the Governor’s AB 900 guidelines.

In March 2019, the A’s submitted an application to the Governor for certification under AB 734. As a precursor to Governor certification, the California Air Resources Board (CARB) had to find that the Howard Terminal project would meet strict greenhouse gas emission reduction targets mandated by AB 734. In August 2020 – 16 months after the A’s submitted their application, and eight months after AB 900’s January 1, 2020, certification deadline – CARB made this finding. Governor Newsom certified the Howard Terminal project in February 2021.

A coalition of businesses operating at the Port of Oakland, led by the Pacific Merchant Shipping Association (PMSA), sued the Governor, challenging his authority to certify the project. PMSA alleged that the Governor’s authority to certify the project under AB 734 had expired as of January 1, 2020—the deadline for certification in AB 900. Specifically, PMSA argued that, by incorporating the AB 900 guidelines into AB 734 “to the extent the guidelines are applicable and not in conflict with the specific requirements” of AB 734, the legislature had incorporated AB 900’s deadline for certification. The trial court rejected PMSA’s arguments. PMSA appealed.

THE COURT OF APPEAL’S DECISION

After discussing the general rules of statutory interpretation, the Court of Appeal concluded that the text of AB 734 was ambiguous as to whether the January 1, 2020, deadline for certification of ELDP projects under AB 900 also applied to the Howard Terminal project under AB 734.

Turning to the legislative history for insight, the court noted that the author of AB 734 proposed a standalone bill for the Howard Terminal project, in part, because the project could not meet AB 900’s deadlines. Thus, one option the legislature considered was whether to simply extend AB 900’s deadlines and have the project proceed under AB 900. The court reasoned that the legislature was aware of this option but chose to adopt AB 734—with no deadlines—instead. Based on its review of the legislative history as a whole, the court concluded that the legislature had not intended to incorporate AB 900’s certification deadline into AB 734.

The court also determined that its construction of AB 734 was supported by the legislative purpose of the statute. As the court noted, the purposes served by enactment of AB 734 are made clear in the legislation: to assist the City of Oakland in retaining the Oakland A’s by streamlining environmental review for a “state-of-the-art baseball park” project; to generate thousands of high-wage, highly skilled jobs during construction and operation of the project; to support the City’s and region’s goals for sustainable, transit-oriented housing, including affordable housing; to provide an opportunity for investment “in new and improved transit and transportation infrastructure”; and to “implement sustainability measures designed to improve air quality and mitigate the emissions of greenhouse gases resulting from the project.” For all these reasons, the special legislation was deemed necessary so that the Howard Terminal Project could be developed in an “expeditious manner.” In light of the significant environmental, economic, and cultural benefits which prompted the adoption of AB 734, the court concluded that PMSA’s reading of the statute would undermine rather than promote the general purposes of the statute and the objectives to be achieved.

Lastly, the court concluded that a practical reading of AB 734, including its lack of deadlines, supported the respondents’ argument that the legislature did not intend to incorporate AB 900’s certification deadline into AB 734. Among other practical reasons for rejecting PMSA’s reading of the statute, the court noted that CARB’s step in the process alone exceeded PMSA’s alleged one-year deadline for certification.

The Court of Appeal agreed with the trial court and affirmed the judgment.

RMM attorneys Whit Manley and Chris Stiles represented Real Party in Interest Oakland Athletics Investment Group LLC in the litigation.

– Nathan O. George