On December 13, 2019, Jim Moose will participate in a panel discussion on the Judicial Standard of Review in CEQA Cases at a conference held at the Hilton Square Hotel in San Francisco by CLE International entitled, CEQA: A Review of 2019 Legal and Policy Developments.
OPR Initiates Rulemaking Process for First Comprehensive Update to the CEQA Guidelines in Twenty Years, Affecting Several Areas of Analysis
On November 27, 2017, the Governor’s Office of Planning and Research (OPR) presented the California Natural Resources Agency with proposed amendments to the CEQA Guidelines. As Director Ken Alex noted in his transmittal letter, this is the most comprehensive update to the Guidelines since the late 1990s. Among other changes, OPR’s amendments affect the analysis of energy impacts, promote the use of vehicle miles traveled (VMT) as the primary metric for transportation impacts, and clarify Guidelines section 15126.2 to specify that an agency must analyze hazards that a project may risk exacerbating.
The amendments to the CEQA Guidelines have been shaped by several years of discussion and public comment. OPR began discussions with stakeholders in 2013 and released a preliminary discussion draft of the comprehensive changes to the Guidelines in August 2015. OPR received hundreds of comments on the proposed updates and has provided a document with Thematic Responses to Comments.
One of the most highly-anticipated and impactful changes is the switch from the level of service (LOS) to VMT as the primary metric in analysis of transportation impacts. These updates were required by Senate Bill 743, which directed OPR to develop alternative methods for measuring transportation impacts. Due to the complexity of these changes, OPR has provided a Technical Advisory on Evaluating Transportation Impacts in CEQA to assist public agencies.
Some highlights from the proposed updates include:
- Appendix G: adds new questions related to Energy, VMT, and Wildfire;
- Guidelines section 15064.3 (SB 743): establishes VMT as the primary metric for analyzing transportation impacts, with agencies having a two-year opt-in period to make the transition easier;
- Energy impacts: includes changes to Appendix G and makes clear that analysis must include energy use for all project phases and include transportation-related energy;
- Guidelines section 15126.2, subdivision (a): adds the phrase “or risks exacerbating” to implement the California Supreme Court’s holding in California Building Industry Association v. Bay Area Air Quality Management District (2015) 62 Cal.4th 369, requiring an EIR to analyze existing hazards that a project may make worse; and
- Guidelines section 15064.4: includes clarifications related to the analysis of greenhouse gas (GHG) emissions to reflect the Supreme Court’s decisions in Cleveland National Forest Foundation v. San Diego Association of Governments (2017) 3 Cal.5th 497 and Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204 (“Newhall Ranch”).
On January 25, 2018 the Natural Resources Agency initiated the formal rulemaking process. From the Agency: The Natural Resources Agency’s proposed updates to the Guidelines Implementing the California Environmental Quality Act are now available. The proposed changes to the Guidelines and related rulemaking materials are available on the Agency’s website at http://resources.ca.gov/ceqa/. Public hearings will be held in Los Angeles on March 14, 2018 and in Sacramento on March 15, 2018. Written comments must be submitted by 5:00pm on March 15, 2018. Hearing locations, instructions for submitting comments and related information regarding the rulemaking process is contained in the Notice of Proposed Rulemaking.
In Central Coast Forest Association v. Fish and Game Commission (2018) 2 Cal.5th 594 (Central Coast Association II), on remand from the Supreme Court, the Third District Court of Appeal ruled in favor of the Fish and Game Commission, upholding the Commission’s denial of a request to move the southern boundary of Central California Coast salmon habitat range, and so delist the population occurring in that range as an endangered species. The court found that the Commission acted within its discretion when it determined that the southern evolutionary significant unit (ESU) was not a separate species from the threatened northern coho salmon, that the southern coho salmon ESU was native to California, and that it should be protected wherever it is currently found. The California Endangered Species Act (CESA) promotes the protection of wildlife, and the Legislature affords the Commission substantial deference in how CESA is interpreted to achieve that goal.
Factual and Procedural Background
In 1995 the Commission listed the southern coho salmon ESU as endangered, due to habitat loss and degradation. In 2000, the Commission amended this ruling, and additional populations of coho salmon occurring north of San Francisco were listed as either endangered or threatened in different regions.
This case is the culmination of two prior appeals in the Third District, and a ruling by the California Supreme Court, in Central Coast Forest Association v. Fish and Game Commission (2017) 2 Cal.5th 594 (Central Coast Association I). The petitioner is an association of timber companies that operate in areas where the southern coho migrates and spawns. Two months before the Commission’s 2004 amended listing decision, petitioner Big Creek Lumber requested that the Commission consider its petition to delist the southern ESU, alleging that new evidence had been made available since the Commission’s 1995 determination, and so the 1995 listing was improper.
Based on the Department of Fish and Wildlife’s (DFW) findings and the Commission’s independent analysis, the Commission denied the delisting request in 2005. The petitioners challenged that decision in superior court, which remanded the matter back to the Commission. The Third District again reversed the judgment on appeal. On remand, the trial court again found for the petitioners, and was once again reversed by the Third District on appeal. The Third District then held that the petitioners committed a procedural error, as a delisting petition must be directed at events that occur after the decision to list a species, and not on new evidence that the original listing decision was improper. This holding was reversed by the Supreme Court in Central Coast Forest Association I. The Supreme Court held that a delisting petition can be based on new evidence, showing that the original decision to list the species was improper. The Court then remanded the case back to the Third District, with instructions to address specific issues and resolve the case on the merits. This decision followed.
Evidentiary Standard and Standard of Review
Under CESA, the evidentiary burden is on the petitioner, and judicial review is deferential to the agency. Petitioners must present enough evidence to lead a reasonable person to conclude that there is a substantial possibility that delisting would be justified, should the agency accept the petition. The Commission evaluates a petitioner’s evidence for reliability and credibility, and weighs it against DFW’s written findings. Because these matters are technical and scientific in nature, the Commission’s findings are afforded deference, and the DFW’s findings, upon which the Commission relies, are given substantial deference. The court reviews the Commission’s determination under administrative mandamus and draws all inferences in favor of the Commission. The court can reverse the agency only if the evidence clearly weighs against the agency’s findings.
Third District’s Decision
The petitioner argued that the southern coho is not native to California under CESA based on studies of archeological sites in the area and historical records and samples. They also argued that natural conditions in the region are too harsh to support a southern coho population, and that the record of hatchery plantings in the area’s streams include hatchery fish from out-of-state stocks.
After reviewing both the petitioner’s evidence and the Commission’s findings, the court upheld the Commission’s determination that the petitioner’s evidence was speculative, incorrect, irrelevant, or at best supported a contradictory inference, from which more than one conclusion could be drawn. The court stated that it was within the Commission’s discretion to draw different conclusions.
For example, reliable museum samples demonstrated that coho salmon existed south of the San Francisco, before hatcheries. The court stated that the low number of specimens was not dispositive, and the lack of conclusive evidence of the historic presence of the southern coho in the record could not be used to prove a negative—that the salmon did not exist. Finally, the petitioner’s contention that the existing samples are “strays” from other areas was unsupported by the evidence.
Notably, the court agreed with the Commission’s contention that “hatchery-influenced” fish are still considered native. While there is some evidence that out-state-stock was used in California hatcheries, there is no evidence to support a conclusion that current population consists entirely of non-native fish. Further, the inability to survive without hatchery support is not evidence for delisting a species.
In making these determinations, the Court agreed with the Commission that “native” means that the species as a whole is native to California and rejected the petitioner’s argument, as a matter of law, that once the focus of the term “species” is narrowed to a particular geographic area, “nativeness” is only viewed relative to that region. CESA emphasizes that the protection of species is of statewide concern. Similarly, the “range” of a species is not determined by its historic range, which may be influenced by human activity, but it is protected wherever found.
Additionally, the court disagreed with the petitioner’s interpretation of the federal Endangered Species Act, and found that an endangerment listing does not require that an individual population must be an important component in the evolutionary legacy of the species.
Federal policy provides that a population of pacific salmonids can only be considered an ESU if it is substantially reproductively isolated from other nonspecific populations and represents an important component in the evolutionary legacy of the species. Based on a brief reference in a 2002 report stating that the southern ESU may be evolutionarily distinct, the petitioner argued that the Commission must find that the southern coho is evolutionarily distinct and important to the species in order to qualify as an ESU. The court held that the Commission correctly interpreted the federal guidance as protecting the southern coho, as a population of the California Central Coast ESU. The federal policy definition of ESU applies to the entire ESU, not just each individual population.
The court also addressed specific issues raised by the Supreme Court to be resolved on remand, reiterating that range means “current range” and not the historic area once occupied by a population. Additionally, a portion of an endangered species may be delisted only if it can be defined as a separate species, subspecies, or ESU that is not endangered. Because the southern coho is at risk for extinction, it is not eligible to be “carved out” from the California Central Coast ESU and delisted.
Fourth District Court of Appeal Upholds Reliance on Mitigated Negative Declaration and Approval of Construction of School
The Fourth District Court of Appeal upheld the trial court’s decision denying a challenge to the City of San Diego’s approval of construction of a secondary school and associated adoption of a mitigated negative declaration. (Clews Land and Livestock, LLC v. City of San Diego (2017) 19 Cal.App.5th 161.)
The City of San Diego adopted an MND and approved a project to build the 5,340-square-foot Cal Coast Academy, a for-profit secondary school, on property adjacent to the plaintiffs’ (Clews Land and Livestock, LLC, et al. [“CLL”]) commercial horse ranch and equestrian facility. CLL filed a petition for writ of mandate and complaint alleging the project would cause significant environmental impacts relating to fire hazards, traffic and transportation, noise, recreation, and historical resources. CLL also argued that CEQA required recirculation of the MND, that the project was inconsistent with the applicable community land use plan, and that the City did not follow historical resource provisions of the San Diego Municipal Code. The trial court determined that CLL had failed to exhaust its administrative remedies, and ruled in favor of the City on the merits. CLL appealed and the Court of Appeal upheld the trial court’s determinations.
Exhaustion of Administrative Remedies
The court first held that CLL failed to exhaust its administrative remedies. The San Diego Municipal Code appeal process provides for two separate procedures—one for appeal of a hearing officer’s decision to the Planning Commission, and one for appeal of an environmental determination to the City Council. Because CLL filed only an appeal of the hearing officer’s decision, the court determined that CLL failed to exhaust its administrative remedies with respect to adoption of the MND. CLL argued that the City’s bifurcated appeal process violated CEQA, but the court found the process was valid. CLL also argued that the City had not provided proper notice of the appeal procedures under Public Resources Code section 21177, subdivision (a), thereby excusing CLL’s failure to appeal the environmental determination. The court explained, however, that section 21177 did not apply because CLL’s failure to appeal was not a failure to raise a noncompliance issue under that section. Where, like here, a public agency has accurately provided notice of a public hearing, but it misstates the applicable procedures to appeal the decision made at that hearing, the only available remedy is to prevent the public agency from invoking an administrative exhaustion defense through equitable estoppel. CLL had pursued a claim for equitable estoppel in the trial court and was unsuccessful, and CLL did not challenge that determination with the Court of Appeal. Therefore, the court found, CLL’s failure to exhaust could not be excused on an equitable estoppel basis.
Adoption of the MND
Notwithstanding its determination that CLL failed to exhaust its administrative remedies, the court also considered the merits of CLL’s claims. The court determined that CLL did not make a showing that substantial evidence supported a fair argument that the project may have a significant effect on the environment. In making its determination, the court emphasized that the project is “relatively modest” and located on already-developed land.
CLL argued that the City was required to prepare an EIR due to potentially significant impacts on fire hazards, traffic and transportation, noise, recreation, and historical resources. The court rejected each of CLL’s arguments. In part, the court was unpersuaded by CLL’s expert’s comments because they were “general” and did not have a specific nexus with the project, they focused on the effects of the environment on the students and faculty at the school rather than on the effects of the school on the environment, and they were conclusory and speculative. In addition, quoting Joshua Tree Downtown Business Alliance v. County of San Bernardino (2016) 1 Cal.App.5th 684, the court noted that “dire predictions by nonexperts regarding the consequences of a project do not constitute substantial evidence.” The court also found that a possibility that noise from the project would impact the adjacent business’s operations was insufficient to require an EIR under CEQA. The court explained that the question is not whether the project would affect particular persons, but whether the project would affect the environment in general. In addition, the court explained that the fact that a project may affect another business’s economic viability is not an effect that must be analyzed under CEQA unless the project may result in a change in the physical environment, such as by causing urban decay.
Recirculation of MND
CLL argued that by adding a shuttle bus plan and describing the school’s intent to close on red flag fire warning days after circulation of the MND, the City substantially revised the MND and was required to recirculate the draft prior to certification. The court rejected these contentions, explaining that the added plans were purely voluntary, and thus could not constitute mitigation measures. In addition, the court explained, CLL did not show that the plans were added to the project to reduce significant effects on the environment. According to the court, all revisions to the MND were clarifying and amplifying in nature and did not make substantial revisions to the project, and therefore, did not warrant recirculation.
Historical Resource Regulations
CLL argued that City did not follow its historical resource regulations and guidelines. The court explained that the City relied on an exemption contained within the regulations, but CLL did not address the substance of that exemption, nor did CLL show that the City was actually required to apply the specific procedures contained in the regulations. Instead, CLL simply critiqued the City’s reliance on the exemption as a post hoc rationalization; the court found this was not enough to meet CLL’s burden to show failure on the part of the City.
Consistency with Neighborhood Plan
CLL argued that the project conflicted with the Carmel Valley Neighborhood 8 Precise Plan because the plan designates the site as open space. CLL’s argument was two-fold. First, CLL argued the site could not be developed because of the plan’s open space designation. Second, CLL argued the plan’s designation was in conflict with the multifamily residential zoning at the project site.
With respect to the plan’s open space designation, the court held that CLL failed to meet its burden to show that the City’s consistency finding was an abuse of discretion. The court explained that the standard is whether no reasonable person could have reached the conclusion made by the City. In making its determination, the City relied on the fact that the property was already developed—the school would be sited at the location of a previously-capped swimming pool, and the project would not impact or be developed on undisturbed open space. The court found that the City’s determination was reasonable, and that CLL did not address the City’s reasoning or explain how the City abused its discretion. With respect to the site’s zoning, the court explained that consistency of the zoning ordinance with the plan was not at issue—instead, the issue was whether the project is consistent with the Precise Plan’s open space designation.
The court affirmed the judgment of the lower court and upheld the City’s determinations regarding the project and the associated MND.
First District Upholds Categorical Exemption with Conditions of Approval and Conditional Use Authorization for Residential Project on Infill Site in Transit Priority Area
In Protect Telegraph Hill v. City and County of San Francisco (2017) 16 Cal.App.5th 261, the First District Court of Appeal, Division Three, upheld the City and County of San Francisco’s (city) finding that a conditional use authorization for the restoration of a small cottage and construction of a three-unit condominium on Telegraph Hill was categorically exempt from CEQA, and found that the city’s conditions of approval relating to construction were not mitigation for pedestrian and traffic impacts.
The proposed project is a new three-unit condominium fronting on Telegraph Hill Boulevard, the restoration of an existing small cottage at the back of the property, and three off-street parking spaces. The city planning department determined that the renovation of the cottage was categorically exempt from CEQA under the Class 1 exemption (Guidelines, § 15301, subd. (d)), and construction of the new building was exempt under the Class 3 exemption as a residential structure totaling no more than four dwelling units (Guidelines, § 15303, subd. (b)). The planning commission approved a conditional use authorization with some conditions on construction activity. A neighborhood group appealed both decisions to the San Francisco Board of Supervisors. The board approved the exemption and the conditional use authorization, with additional conditions on the construction activity. Protect Telegraph Hill filed a petition for writ of mandate, arguing that the city’s findings relating to the exemptions and approval of the conditional use authorization were unsupported by the evidence, the city failed to consider the entire project, and unusual circumstances and the inclusion of mitigation measures made the reliance on categorical exemptions improper. The trial court denied the petition, and Protect Telegraph Hill appealed.
On appeal, the petitioner argued that granting the exemptions was unlawful because the conditions of approval imposed by the city were intended to mitigate environmental impacts from the project’s construction, indicating that the project would have significant impacts and thus could not be exempt from CEQA. The petitioner also argued that the project description was inadequate to determine whether the project was truly exempt and that the unusual circumstances exception applied.
The court concluded that while some of the conditions of approval addressed traffic and pedestrian safety, they were attached to the approval of the conditional use authorization, and not the exemptions. The exemptions were initially approved by the planning department without qualification, while the conditional use authorization was originally approved by the planning commission with certain conditions. The petitioner had to appeal both decisions separately to the Board of Supervisors, which voted separately on each decision, attaching further conditions to the conditional use authorization only. The court also found that there was no substantial evidence in the record suggesting that the project would have significant effects on traffic and pedestrian safety. The court stated that the appellant’s “expressions of concern” in the record were not substantial evidence. The court also rejected attacks on the project description, finding that the included description complied with the requirements in the San Francisco Administrative Code and there was no evidence in the record suggesting the description was deficient.
Turning to the unusual circumstances exception, the court applied the two-part test announced by the California Supreme Court in Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086. The city’s conclusion that the unusual circumstances exception was not met is reviewed for substantial evidence. But, if there are unusual circumstances, the court considers whether there is a fair argument that there is a reasonable possibility that the project will have a significant effect.
Protect Telegraph Hill argued that the location of the project on Telegraph Hill was itself an unusual circumstance. But the court found that the city’s determination that there were no unusual circumstances was supported by substantial evidence. While Telegraph Hill is described in the design element of the general plan, the project conformed to the zoning requirements for that area and was similar in proportion to the immediately adjacent buildings. The petitioner also argued that the area was heavily traveled because of its proximity to Coit Tower landmark, but the court agreed with the city that large traffic and pedestrian volumes was “more commonplace than unusual” in San Francisco.
Next, the petitioner argued that the project would impair views of the downtown skyline from the public stairway. The court rejected this argument in part by applying new Public Resources Code section 21099, subdivision (d), which applies to residential urban infill projects in transit priority areas, and requires that aesthetic impacts “shall not be considered significant impacts on the environment.” Additionally, the city considered the project’s impact on views from Coit Tower and Pioneer Park and concluded it would not have an adverse effect. The petitioner also argued that the 30% slope of the lot was an unusual circumstance. The court again agreed with the city that the slope was not unusual for San Francisco and found that the city’s engineering report provided substantial evidence supporting its decision. The petitioner also submitted an engineering report that provided conflicting evidence, but that report did not negate the substantial evidence supporting the city’s conclusion.
Lastly, the petitioner argued that the conditional use authorization finding was unsupported because of the project’s potential to obscure views of the downtown skyline from the stairway. The court held that even if there were some conflict with one policy in the general plan, the policies were not strictly construed and the project was consistent with other policies and the Urban Design Element for Telegraph Hill. Ultimately, the court found that the record supported the city’s conclusion that the project would not change the character of Telegraph Hill, and denied the petition.
First District Upholds Categorical Exemption for Planned Parenthood Clinic and Implied Finding of No Unusual Circumstances Under the “Fair Argument” Test
In Respect Life South San Francisco v. City of South San Francisco (2017) 15 Cal.App.5th 449, the First District Court of Appeal, Division One, upheld the City of South San Francisco’s (City) finding that a conditional use permit for the conversion of an office building into a medical clinic was categorically exempt from CEQA, as well as the City’s implied finding that the unusual circumstances exception did not apply.
The challenged project proposed converting an existing office building into a medical clinic providing a range of services and operated by Planned Parenthood. The City Planning Commission approved the application after a public hearing and found that the project was categorically exempt from CEQA review. Respect Life South San Francisco (Respect Life) appealed that decision to the City Council, arguing that, because of the nature of Planned Parenthood’s services, the project might draw protests that could have environmental impacts. The City Council rejected the appeal and found that the project qualified for three categorical exemptions. Respect Life and three individuals filed a petition for writ of mandate challenging the City’s decision. The trial court denied the petition and Respect Life appealed. On appeal, Respect Life admitted that at least one of the exemptions applied, but alleged that the unusual circumstances exception applied, requiring full environmental review.
The court first rejected Planned Parenthood’s argument that Respect Life lacked standing. Planned Parenthood argued that Respect Life had failed to allege that it had a beneficial interest in the litigation, but the court found that the group’s petition included sufficient allegations to establish standing.
The court then articulated the standard of review for categorical exemptions and the unusual circumstances exception under the California Supreme Court’s recent decision in Berkeley Hillside Preservation v. City of Berkeley (2016) 60 Cal.4th 1086 (Berkeley Hillside). At the administrative level, a challenger must prove to the agency that 1) there are unusual circumstances, and 2) there is a reasonable possibility of a significant impact because of those circumstances. Upon judicial review, a court applies the deferential “substantial evidence” test to the agency’s decision regarding the first prong, and the non-deferential “fair argument” test to the agency’s decision on the second.
Here, the City denied the administrative appeal and found the project categorically exempt, but made no express finding on the unusual circumstances exception. Thus, the record did not reveal whether the City concluded that the project presented no unusual circumstances (a decision entitled to deference) or had found that, while there were unusual circumstances, there was no reasonable possibility of significant impacts due to those circumstances (a decision reviewed under the non-deferential “fair argument” test). The court determined that when an agency makes an implied finding regarding the unusual circumstances exception, the court must assume that the agency determined that there were unusual circumstances. To uphold the agency’s implied finding that the exception is inapplicable, a court must conclude that the record contains no substantial evidence supporting either 1) the existence of unusual circumstances, or 2) a fair argument that such circumstances will have a significant effect on the environment. Thus, the court applies a non-deferential test to both implied determinations.
In this instance, the court found that even assuming that the first condition had been met by Respect Life, it had not identified any substantial evidence supporting a fair argument that the protests may result in significant effects. The court stated that Respect Life contradicted itself by conceding that CEQA review does not consider the identity of the applicant or operator, but also arguing that because the proposed operator is Planned Parenthood, the project might draw protests that will create indirect environmental impacts. The court held that “the possibility of ‘foreseeable First Amendment activity’” does not establish the unusual circumstances exception, where Respect Life “simply assert[ed] that protests will lead to environmental impacts.” The court also found that comments by opponents of abortion, even those that indicated they would protest, were not substantial evidence supporting a fair argument that there is a reasonable possibility that protests will have indirect significant effects on the environment. Ultimately, Respect Life was required, but unable, to point to evidence of the alleged indirect impacts, not just evidence of the protest activity that might lead to such impacts.
In Bridges v. Mt. San Jacinto Community College District (2017) 14 Cal.App.5th 104, the Fourth District Court of Appeals held that a land acquisition agreement entered into by the Mt. San Jacinto Community College District to purchase property from the Riverside County Regional Park & Open-Space District for potential future use as the site of new campus did not trigger the duty to prepare an EIR.
As a threshold issue, the court held that the appellants were barred from raising objections to the college’s decision because they had failed to exhaust their administrative remedies. The appellants argued that they were excused from objecting to the purchase agreement because the college did not give notice of the meeting at which it approved the agreement. Because the appellants could not establish that the no-notice exception applied—the court relied on the presumption afforded by Evidence Code section 664 to presume that the college had posted the agenda in accordance with the Brown Act requirements because the record contained no evidence to the contrary.
Nonetheless, the court went on to discuss the merits and determined that appellants’ claims were meritless because the purchase agreement required completion of an EIR before the sale could even be finalized. The court found that the purchase agreement complied with CEQA’s land acquisition agreement rule. Unlike the circumstances in the definitive California Supreme Court decision, Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, here, no funds had been committed to the project and a developer had yet to be identified. The court found nothing in the administrative record to indicate that the college had committed itself to a definitive use of the property.
Finally, the court held the college did not violate CEQA by failing to formally adopt local implementing guidelines. Public Resources Code section 21082 provides an exemption for school districts, if they “utilize” the guidelines of another public agency. Here, the college had chosen to use the local guidelines adopted by Riverside County.
In Friends of the Eel River v. North Coast Railroad Authority (2017) 3 Cal.5th 677, the California Supreme Court held that the Interstate Commerce Commission Termination Act (ICCTA) does not preempt CEQA when a California public agency decides to undertake a new railroad project, even if the state agency later authorizes a private entity to operate the new rail line. The Court therefore concluded that the North Coast Railroad Authority (NCRA) was required to comply with CEQA prior to taking steps to reinitiate rail service on a segment of an interstate rail line that had gone out of operation for many years. The Court declined, however, to enjoin the ongoing operations of the railroad by NWPCo, the private operator. Because these operations had been occurring during the course of the litigation against NCRA, any such injunction would intrude into an area of activity that is preempted by the ICCTA, namely, private railroad operations.
The NCRA is a state agency created in 1989 for the purpose of resuming railroad freight service along a previously-abandoned route through Napa and Humboldt Counties. The northern portion of the line runs along the Eel River, while the southern portion, at issue in the case, runs along the Russian River. In 2000, the Legislature authorized funding for NCRA’s program, with the express condition of CEQA compliance. NCRA subsequently contracted with NWPCo, a private company, to run the railroad. As part of the lease agreement between the two entities, NWPCo agreed that CEQA compliance by NCRA was a precondition to resumed operation. Accordingly, in 2007, NCRA issued a notice of preparation, and in June 2011, it certified a Final EIR. In July 2011, petitioners sued, challenging the adequacy of the EIR on a number of grounds. Concurrently, NWPCo commenced limited freight service along the Russian River. In 2013, NCRA took the unusual step of rescinding its certification of the Final EIR, asserting in explanation as follows: that ICCTA preempted California environmental laws; that the reinitiation of rail service was not a “project” under CEQA; and that the EIR NCRA had prepared had not been legally required. Although NCRA successfully removed the case to federal court, the case subsequently sent back to state court for a resolution of both the state CEQA claims and NCRA’s ICCTA preemption defense. The Court of Appeal sided with NCRA, finding that ICCTA was broadly preemptive of CEQA. The Supreme Court granted review.
Federal preemption is based on the Supremacy Clause of the United States Constitution, which provides that federal law is the supreme law of the land. Preemption can occur expressly, through the plain words of a federal statute, or can be implied, as when a court discerns that Congress intends to occupy an entire field of regulation, or when a court concludes that a state law conflicts with a federal purpose or the means of achieving that purpose. A federal statute can be preemptive on its face or as applied. There is a presumption against preemption, particularly in areas traditionally regulated by the states, which can only be overcome by a clear expression of intent (the Nixon/Gregory rule). The market participant doctrine is a related concept and holds that a public agency has all the freedoms and restrictions of a private party when it engages in the market (provided that the state does not use tools that are unavailable to private actors). The courts presume that Congress did not intend to reach into and preempt such proprietary marketplace arrangements, absent clear evidence of such expansive intent.
The Court began by recognizing that ICCTA does preempt state environmental laws, including CEQA, that interfere with private railroad operations authorized by the federal government. ICCTA contains an express preemption clause giving the federal Surface Transportation Board (STB) jurisdiction over railroad transportation (including operation, construction, acquisition, and abandonment). ICCTA’s purpose was both unifying (to create national standards) and deregulatory (to minimize state and federal barriers). Although ICCTA is a form of economic regulation, state environmental laws are also economic in nature when they facially, or as applied, dictate where or how a railroad can operate in light of environmental concerns. Such state laws act impermissibly as “environmental preclearance statutes.” These legal principles, however, did not extend to the actions of NCRA in this case. Just as a private railroad company may make operational decisions based on internal policies and procedures, and may even modify its operations voluntarily in order to reduce environmental risks and effects, so too may a state, in determining whether to create a new railroad line, subject itself to its own internal requirements aimed at environmental concerns. In the latter context, though, a state operates through laws and regulations, as opposed to purely private policies. When a state acts in such a manner, its laws and regulations are a form of self-governance, and are not regulatory in character. CEQA is an example of such an internal guideline that governs the process by which a state, through its subdivisions, may develop and approve projects that affect the environment. Viewed in this context, CEQA is part of state self-governance, and is not a regulation of private activity.
Although the market participant doctrine does not directly apply, being mainly applicable in Commerce Clause jurisprudence, the doctrine supports by analogy the view that that California was not acting in a regulatory capacity in this case. CEQA is analogous to private company bylaws and guidance to which corporations voluntarily subject themselves. By imposing CEQA requirements on the NCRA, the state was not “regulating” any private entity, but rather was simply requiring that NCRA, as one of its subdivisions, conduct environmental review prior to making a policy decision to recommence the operation of an abandoned rail line. If Congress had intended to preempt the ability of states to govern themselves in such a fashion, any such intention should have been clear and unequivocal. The Court found no such intent in the ICCTA.
The Court’s remedy, however, was cognizant of the narrowness of its holding. The Court concluded that, because NWPCo is currently operating the line, the California Judiciary could not enjoin that private entity’s operations even if, on remand, the lower state courts found problems with NCRA’s CEQA documentation. An injunction under CEQA against NWPCo would act as a regulation, by having the state dictate the actions to private railroad operator. Such action would go beyond the state controlling its own operations.
James G. Moose & Sara Dudley
Fourth District Holds Substantial Conformance Review Is Not Subject to Administrative Appeal to the City Council under Public Resources Code Section 21151, subdivision (c).
In San Diegans for Open Government v. City of San Diego (2016) 247 Cal.App.4th 1306, the Fourth District Court of Appeal upheld the City of San Diego’s denial of an administrative appeal of the City Planning Commission’s determination that an applicant’s modified design plans substantially conformed to the conditions and requirements of a previously issued development permit and that there was no need for further environmental review.
The challenged project involved a master plan, initially approved in 1997 and modified several times, for a mixed-use, industrial, commercial, and residential development. In 2012 the city approved a planned development permit to allow construction of the first phase of development. In November 2013, the applicant proposed design changes triggering the city’s Substantial Conformance Review (SCR) process under the permit. City staff reviewed the proposed changes to determine if the modified project was consistent with the previously approved project, including the existing environmental mitigation conditions. On January 30, 2014, the city’s development services department issued a written notice of decision approving the project and finding it to be in substantial conformance.
The petitioners appealed the decision to the planning commission, contending that the changes were substantial and that SCR review was not appropriate. The commission denied the appeal and upheld the SCR decision. The petitioners then attempted to appeal the decision to the city council, but the city refused to process the appeal, citing CEQA Guidelines section 15162 and San Diego Municipal Code section 113.0103. The petitioners filed a petition for writ of mandate asserting they were entitled to an administrative appeal before the city council. The trial court denied the petition and the petitioners appealed.
The court first rejected the petitioners’ arguments that they were entitled to an administrative appeal to the city council under Public Resources Code section 21151, subdivision (c). That section provides that if a “nonelected decisionmaking body of a local lead agency certifies an environmental impact report, approves a negative declaration or mitigated negative declaration, or determines that a project is not subject” to CEQA, that decision can be appealed to the agency’s elected decision-making body, if any. The court held that section 21151, subdivision (c), did not apply because the SCR decision did not certify an EIR, approve a negative declaration or mitigated negative declaration, or decide that the project was not subject to CEQA.
The petitioners further argued that the SCR decision was a decision that the project is not subject to CEQA, but the court rejected this argument. The court stated that city had already held that the project was subject to CEQA, and had required several environmental review documents and a mitigation monitoring and reporting program, all of which were considered as part of SCR process.
The petitioners also argued that a provision of the San Diego Municipal Code allowed appeals of “environmental determinations” to the city council, but the court disagreed. The court observed that the municipal code provision defining “environmental determination” was substantially similar to the activities in Public Resources Code section 21151, subdivision (c). Hence, the petitioners were not entitled to an administrative appeal of the planning commission’s decision to the city council under CEQA or the municipal code.