Archives: July 2025

DEVELOPER MUST BE JOINED AS A DEFENDANT ONCE NAMED IN A NOTICE OF EXEMPTION, EVEN IF IDENTIFIED AFTER INITIAL PROJECT APPROVAL

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In Citizens for a Better Eureka v. City of Eureka (June 11, 2025, A170214) __Cal.App.5th__ , the First District Court of Appeal upheld the trial court’s dismissal of a CEQA challenge for failure to timely join a necessary and indispensable party. Petitioner failed to name the developer of an affordable housing redevelopment project in its petition challenging the Eureka City Council’s approval of the sale of a parking lot for the project. The developer was identified in the Notice of Exemption (NOE) that was published after Petitioner filed its lawsuit challenging the City’s first approval related to the project. The case provides guidance on how courts interpret the scope of a “project” under CEQA and clarifies petitioners’ obligations under Public Resources Code section 21167.6.5 when a developer is identified after initial agency action.

Background: Approval of Affordable Housing on Surplus Parking Lot

In April 2023, the Eureka City Council adopted a resolution authorizing the removal of public parking from a City-owned lot to facilitate development of affordable housing. The Council determined that the action was exempt from CEQA under the Class 12 categorical exemption for sales of surplus government property. (CEQA Guidelines, § 15312.) At the same meeting, the City issued an RFP for affordable housing proposals on the site.

One month later, Petitioner Citizens for a Better Eureka filed a petition for writ of mandate challenging the April resolution under CEQA. The petition named only the City and the City Council as respondents. It alleged that the City’s reliance on a Class 12 exemption improperly “piecemealed” the project by focusing on the sale of the parking lot and ignoring the foreseeable redevelopment of the site.

In July, the City Council adopted a second resolution selecting the Wiyot Tribe (Tribe) as the preferred developer and authorizing the City to enter into a memorandum of agreement with the Tribe. The City then filed an NOE citing CEQA’s affordable housing exemptions. (Pub. Resources Code, §§ 21159.21, 21159.23; CEQA Guidelines, §§ 15192, 15194.) The NOE identified the Tribe as the project developer.

Seven months later, Petitioner filed a motion for preliminary injunction. The Tribe later moved to dismiss the petition, arguing that it was a necessary and indispensable party that could not be joined due to sovereign immunity, and, in any event, could no longer be joined because the 35-day statute of limitations following the NOE had expired. The trial court granted the Tribe’s motion to dismiss the petition. Petitioner appealed.

Court of Appeal: The Tribe Was a Required Real Party in Interest

The Court of Appeal affirmed the trial court’s dismissal of the petition. As a threshold matter, the Court rejected Petitioner’s attempt to limit the scope of its petition to just the April resolution authorizing the removal of parking. The Court emphasized that CEQA defines a “project” as the whole of the action, not just isolated approvals. (CEQA Guidelines, § 15378.) Here, although the petition nominally targeted the April resolution, the substance of the petition challenged the environmental effects of the full redevelopment of the site into affordable housing.

Because the Tribe was publicly named as the developer in the July NOE, the Court held that Petitioner was required to name and serve the Tribe as a real party in interest under PRC section 21167.6.5, subdivision (a). The Tribe had contractual development rights, had invested time and resources into planning and funding, and was directly affected by the litigation. Petitioner reiterated its argument that the petition only challenged the City’s authorization of parking removal before the Tribe was identified in the NOE. The Court again rejected this assertion, noting that such an interpretation would circumvent PRC § 21167.6.5’s goal of joining all necessary parties in “one bite” before proceeding to the merits of the action.

Statute of Limitations and Indispensable Party Analysis

The Court next determined that Petitioner’s failure to name and serve the Tribe within 35 days of the NOE barred its joinder. Because the Tribe could not be joined, the Court considered whether it was also indispensable under the four-factor test in Code of Civil Procedure section 389(b). The Court concluded that the Tribe was indispensable.

First, the Court determined the Tribe would be prejudiced by a judgment rendered in its absence, as this would prevent the project from moving forward or at least jeopardize the time and resources the Tribe already contributed to the project. Moreover, Petitioner’s failure to reduce uncertainty in the litigation, such as by seeking a temporary stay to halt progress on the parking lot site, exacerbated prejudice to the Tribe. The Court also concluded that the public rights exception to the traditional joinder rules did not apply because the project was expressly required to comply with all applicable local, state, and federal laws, and there was no evidence that finding the Tribe to be an indispensable party would place the project beyond the reach of the state’s police powers.

Second, Petitioner did not offer any argument that there is some way to avoid or lessen prejudice to the Tribe.

Third, the Court determined a judgment rendered in the Tribe’s absence would not be adequate because the Tribe’s role in developing, building, managing, and operating the project creates a distinct economic interest from the City’s interest in adding affordable housing.

Fourth, the Court explained that it was neutral regarding whether Petitioner would have an adequate remedy if the action were dismissed. While there was no record of other ongoing litigation by Petitioner related to the project, any lack of an adequate remedy was a result of Petitioner’s own failure to timely join the Tribe, and it was not clear that Petitioner would be precluded from challenging future approvals related to the project.

– Veronika Morrison

THIRD DISTRICT CLARIFIES LIMITS ON PERMIT CHECKLISTS UNDER THE PERMIT STREAMLINING ACT

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In Old Golden Oaks LLC v. County of Amador (May 30, 2025, C09948) __Cal.App. ___, the Third District Court of Appeal struck down a vague “catch-all” provision in Amador County’s encroachment permit checklist as inconsistent with the Permit Streamlining Act (Gov. Code, § 65920 et seq.), which requires agencies to “specify in detail” what information is required to process a development application. But this victory for the developer was largely Pyrrhic, as the court simultaneously upheld the County’s authority to demand nearly all the same information under CEQA, based on requirements embedded in the grading permit checklist and municipal code. The opinion underscores the importance of clear submittal requirements, while affirming agencies’ discretion to require environmental documentation under CEQA.

Background

Old Golden Oaks LLC is the owner of a residential subdivision in Amador County. In 2023, Old Golden Oaks applied to the County for encroachment and grading permits for a housing development project. The County deemed both applications incomplete and requested a range of additional materials, including wastewater treatment design plans, a water service agreement, fire protection documentation, and several items particular to the grading permit, including a stormwater pollution prevention plan and an erosion control plan.

Old Golden Oaks responded with a writ petition, arguing that the County’s request for additional information violated the Permit Streamlining Act because the requests were not included in the County’s published checklists. The trial court sustained the County’s demurrer without leave to amend. Old Golden Oaks appealed.

The Court of Appeal’s Decision

The Permit Streamlining Act was enacted to bring clarity and efficiency to the land use development review process. Among other requirements, it obligates public agencies to maintain checklists identifying in detail the information needed to process a permit application. (Gov. Code, §§ 65940, 65941.) These checklists function as procedural safeguards, enabling applicants to know up front what is required for a complete application and preventing agencies from rejecting applications based on unlisted or vague requirements. Old Golden Oaks argued that the County violated the Act by declaring its application incomplete based on information that was not listed in the County’s checklist, particularly under the encroachment permit’s catch-all provision allowed the director to require “[o]ther information.” In the developer’s view, this undermined the Act’s purposes of transparency and predictability.

The County countered that it is impossible to enumerate every potential environmental document that an agency may need to review a project’s impacts, particularly under CEQA. It argued that the open-ended language in the encroachment permit, along with CEQA-related references in the grading permit materials, gave it flexibility to request such environmental information. The court split the difference. It held that the catch-all provision in the encroachment permit checklist violated the Permit Streamlining Act’s requirement to “specify in detail” what must be submitted, explaining that agencies cannot condition application completeness on vague or discretionary demands. On the other hand, the court upheld the County’s treatment of the grading permit, finding that the relevant provisions of the municipal code and permit materials provided sufficient notice that CEQA compliance would be required. Old Golden Oaks had acknowledged that its proposed grading (nearly 59,000 cubic yards) triggered CEQA review under the County’s municipal code. The court agreed with the County that requiring agencies to maintain exhaustive lists of CEQA-related documentation would be impractical and contrary to the goal of obtaining necessary project-specific environmental information. The Permit Streamlining Act prohibits agencies from requiring CEQA compliance prior to deeming an application complete, but it does not prohibit agencies from requiring enough information to determine the appropriate level of CEQA review.

Finally, the court rejected Old Golden Oaks’s argument that the County must house all permit application requirements in a single checklist. The Permit Streamlining Act permits agencies to use “one or more lists,” and including some requirements through cross-referenced sections of the municipal code was sufficient.

U.S. SUPREME COURT NARROWLY CONSTRUES THE UNIVERSE OF INDIRECT EFFECTS TO BE ADDRESSED IN AN EIS UNDER NEPA

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In Seven County Infrastructure Coalition v. Eagle County, Colorado (2025) (May 29, 2025, No. 23-975) 605 U.S. ___, the U.S. Supreme Court held that NEPA affords substantial deference to an agency’s decisions about where to draw the line when considering indirect environmental effects. An agency is not inherently required to analyze impacts of a separate project that might foreseeably result from the project the agency is reviewing, particularly where those separate projects fall outside the agency’s regulatory authority.

Justice Kavanaugh delivered the opinion, and Chief Justice Roberts and Justices Thomas, Alito, and Barrett joined. Justice Sotomayor filed a concurring opinion, in which Justices Kagan and Jackson joined. Justice Gorsuch took no part in the consideration or decision of the case.

Background

In August 2021, the U.S. Surface Transportation Board (Board) prepared a 3,600 page EIS for the Seven County Infrastructure Coalition’s (the Coalition’s) proposed construction and operation of an 88-mile railroad line to connect Utah’s Uinta Basin to the national rail network to facilitate the transportation of crude oil from Utah to refineries in Louisiana, Texas, and elsewhere. The Board approved the project in December 2021.

The EIS noted, but did not fully analyze, the potential effects of increased upstream oil drilling in the Uinta Basin and increased downstream refining of crude oil carried by the railroad. The EIS did not analyze upstream drilling because (i) the project was not an oil well or drilling permit, (ii) the Board has no authority or control over potential future oil and gas development in the Uinta Basin and any such future projects would be subject to the approval processes of other agencies, and (iii) any such future development is speculative and attenuated from the railroad line project. The EIS also explained that downstream oil refining was not analyzed because (i) the Board was not privy to or in charge of the identity of the specific destinations for such projects, and (ii) the Board would have no role in approving or regulating the production, refining, or use of Uinta Basin crude oil.

A Colorado county and several environmental organizations filed petitions for review in the U.S. Court of Appeals for the D.C. Circuit. The D.C. Circuit vacated the Board’s EIS and approval, concluding that the Board failed to take the requisite “hard look” under NEPA at all of the environmental impacts—specifically the effects of upstream oil drilling and downstream oil refining which were “reasonably foreseeable impacts” that the EIS should have analyzed.

The Coalition and the Uinta Basin Railway sought review. The Supreme Court granted certiorari.

The United States Supreme Court’s Decision

The Supreme Court reversed the D.C. Circuit’s decision, concluding that the Board’s EIS was sufficient under NEPA. The Court explained that the D.C. Circuit did not afford the Board the substantial deference required in NEPA cases, and that the D.C. Circuit erroneously ordered the Board to address environmental effects outside the scope of what NEPA requires.

Agency Deference

The Court concluded that when determining whether an EIS complied with NEPA, courts should afford substantial deference to the agency pursuant to the “arbitrary-and-capricious” standard, under which a court asks only whether the agency action was reasonable and reasonably explained, regardless of whether it agrees with the agency’s decision.

The Court emphasized that NEPA is a purely procedural statute and imposes no substantive constraints on an agency’s ultimate decision on a project. The adequacy of an EIS is therefore relevant only to whether an agency’s final decision to approve the project was reasonably explained. In other words, courts should review an agency’s EIS to check that it addresses the environmental effects of the project at hand. In conducting that review, courts should afford substantial deference to the agency as to the scope and contents of the EIS.

The Court further explained that courts should not “micromanage” an agency’s choices regarding the length, content, and level of detail of the resulting EIS, so long as it falls within a “broad zone of reasonableness.” As specifically relevant here, courts should defer to agencies’ decisions about where to draw the line regarding (i) how far to go in considering indirect environmental effects from the project at hand and (ii) whether to analyze environmental effects from other projects separate in time or place from the project at hand.

The Court noted that court decisions that have not applied this level of deference have “slowed down or blocked many projects,” resulting in fewer and costlier projects.

Moreover, the Court held that an EIS deficiency may not necessarily require a court to vacate the agency’s approval of a project, at least absent reason to believe that the agency might disapprove the project if it added more to the EIS. In this case, it explained, even if the EIS drew the line on the effects of separate upstream or downstream projects too narrowly, that mistake would not require a court to vacate the approval of the project.

Analysis of Projects Separate in Time or Place

The Court determined that the D.C. Circuit erroneously required the Board to address environmental effects from projects separate in time or place from the railroad line. It stated that the Board’s decision to exclude the upstream oil drilling and downstream oil refining from the proposed project assessed in the EIS complied with NEPA and the Court’s NEPA precedents.

The Court explained that while NEPA might require analysis of the environmental effects of a project that extend outside the geographical territory of the project or occur later in time, if the project at issue might lead to the construction or increased use of a separate project—the agency need not consider the environmental effects of that separate project because the separate project breaks the chain of proximate causation. Effects from a separate project may be foreseeable, but that does not mean that they are relevant to the agency’s decisionmaking process or that it is reasonable to hold the agency responsible for those effects. Agencies may draw a “manageable line” that encompasses the effects of the project at hand, but not the effects of projects separate in time or place.

The Court emphasized that agencies are not required to analyze the effects of projects over which they do not exercise regulatory authority. If other projects are interrelated or close in time to the project at issue, the question is whether that other project is a single project within the authority of the agency at issue—a question that is also deferential to the agency.

Here, the Court concluded that the EIS correctly explained that the environmental effects of future upstream oil drilling are distinct from construction and operation of the railroad line, and that any effects from downstream oil refineries are outside the railroad project. The Court explained that more importantly, the Board has no regulatory authority over the separate upstream drilling and downstream refinery projects, as it does not regulate oil drilling, oil wells, oil and gas leases, or oil refineries, and there is no “reasonably close causal relationship” between the railroad line and the effects of the separate projects.

The Court stated that courts should strive for “clarity and predictability” in deciding cases involving the American economy, noting that some courts have failed to meet that objective. It also explained that citizens may not enlist federal courts to delay or block projects based on the environmental effects of other, separate projects, and that the political process is the appropriate forum in which to air such policy disagreements.

Concurring Opinion (Justice Sotomayor, joined by Justices Kagan and Jackson)

The concurring opinion explained that the majority’s analysis is unnecessarily grounded in matters of policy, and that legal precedent results in the same outcome.

Citing two previous SCOTUS cases, the concurrence reasoned that an agency is not responsible for environmental impacts it could not lawfully have acted to avoid, nor for impacts that are so causally attenuated from the agency’s statutorily assigned tasks that it could not reasonably have been expected to consider them as part of its decisionmaking process.

Here, the concurrence concluded, the Board’s organic statute, the Interstate Commerce Commission Termination Act, provides a clear presumption in favor of approving new railways, and confirms that the Board has no authority or jurisdiction over development of oil and gas in the Basin nor any authority to control or mitigate the impacts of any such development. Therefore, the Board correctly determined that it could not have rejected the railroad line application to prevent effects of oil drilling and refining.

– Veronika Morrison

FIFTH DISTRICT HOLDS THAT COURTS MUST ALWAYS CONSIDER REASONABLENESS IN WATER USE DISPUTES; ENVIRONMENTAL LITIGATION NOT EXEMPT FROM INJUNCTION BOND REQUIREMENT

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FIFTH DISTRICT HOLDS THAT COURTS MUST ALWAYS CONSIDER REASONABLENESS IN WATER USE DISPUTES; ENVIRONMENTAL LITIGATION NOT EXEMPT FROM INJUNCTION BOND REQUIREMENT

In Bring Back the Kern v. City of Bakersfield (2025) 110 Cal.App.5th 322, the Fifth District Court of Appeal held that under Article X, Section 2 of the California Constitution, courts must always consider reasonableness when adjudicating the use of water, even if legislation exists that does not require such determination. The ruling also clarified that nominal bonds are not permissible in environmental litigation under Code of Civil Procedure section 529.

Background

Numerous public and private entities hold claims to the waters of the Kern River through a web of contracts, decrees, and agreements. The City of Bakersfield diverts water through multiple weirs along the river to manage and allocate flows under these rights. Historically, these diversions have prevented water from reaching Bakersfield. However, in 2023, an unusually large snowpack caused increased river flows, allowing water to flow into the City’s riverbeds.

Bring Back the Kern, along with several other non-governmental organizations, sued the City of Bakersfield, alleging violations of Fish & Game Code section 5937. Plaintiffs argued that the City was operating the weirs in a manner that reduced river flows below a volume sufficient to keep fish populations downstream in “good condition.” In addition, Plaintiffs sought and obtained a preliminary injunction directing the City to act in accordance with section 5937.

The City appealed the injunction, arguing that the court erroneously failed to consider the reasonableness of the imposed water use as mandated by Article X, Section 2 of the California Constitution.

The Court of Appeal’s Decision

“Reasonableness” Requirement

The Fifth District reversed the trial court, holding that because the provisions of Section 2 are self-executing, courts must always consider reasonableness when adjudicating competing water use claims, even when relevant statutes exist that have determined a certain use is per se reasonable.

The Court of Appeal determined that because Section 2 expressly requires the use of water be both “beneficial” and “reasonable,” the trial court should have conducted this analysis based on the facts before it prior to granting the injunction. According to the Court, though the California State Legislature deemed the use of water to keep fish in good condition reasonable, courts must make this determination based on the totality of the circumstances in each specific case.  A use determined to be reasonable by the Legislature in one instance may be unreasonable in another—and unreasonable or non-beneficial uses of water are prohibited under the California Constitution. Therefore, while statutes governing the use of water may operate “alongside” Section 2, they cannot outright supplant its provisions.

Bond Requirement

The Fifth District also made an impactful determination regarding the bond requirement for injunctions granted in environmental litigation.

The trial court required that the plaintiffs post only a nominal $1,000 bond as an undertaking for the preliminary injunction. The trial court noted, however, that there was a lack of clarity and conflicting case law regarding whether nominal bonds or waivers were permissible in environmental litigation.

Disagreeing with the trial court, the Court of Appeal found that Code of Civil Procedure section 529 was “quite clear” in its requirement that moving parties must post a bond tethered to the potential damages or costs associated with the injunction. The court noted that the statute provided only four exemptions to this rule, and environmental litigation was not one of them. The court could not insert an exception to Section 529 that did not exist, regardless of whether it was beneficial as a matter of public policy. Upon its order for remand, the Fifth District instructed that no future preliminary injunction could be permitted unless it was conditioned upon the furnishing of an appropriate bond.

– Adam Nir