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Second District Court of Appeal Holds That CEQA Is Inapplicable to Water Replenishment District’s Declaration of a “Water Emergency” in the Central Basin Groundwater Basin, and Even If CEQA Did Apply, the Court Adjudicated “Physical Solution” in the Central Basin Trumps CEQA

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On December 10, 2012, the California Second District Court of Appeal, in Central Basin Municipal Water District v. Water Replenishment District of Southern California (2012) __Cal.App.4th__ (Case No. B235039) upheld the Los Angeles County Superior Court’s order sustaining a demurrer to the Central Basin Municipal Water District’s (CBMWD’s) petition for writ of mandate, which alleged that defendant Water Replacement District of Southern California (WRD) improperly failed to conduct CEQA review before declaring a “water emergency” in the Central Basin.

Background

Groundwater management in the Central Basin groundwater basin is governed by a court ordered judgment. The judgment provides a comprehensive framework for water use in the Central Basin and imposes a “physical solution” described as “an equitable remedy designed to alleviate overdrafts and the consequential depletion of water resources in a particular area, consistent with the constitutional mandate to prevent waste and unreasonable water use and to maximize the beneficial use of water, with recognition that it is a limited resource.” (Hillside Memorial Park & Mortuary v. Golden State Water Co. (2011) 205 Cal.App.4th 534, 538, fn. 2.)

The judgment empowers WRD to declare a “water emergency” when the Central Basin resources risk degradation.  Declaring a water emergency alters the portions of a pumper’s allocation of water that the pumper may “carryover” to another year, meaning the entity retains the right to that water longer than it otherwise would. It also permits a longer period to replace a pumper’s over-extraction of groundwater (i.e., an extraction of an amount greater than the pumper’s annual allotment). The judgment imposes a limit of one year on a declared water emergency, though the term may be less than one year. The judgment also reserves continuing jurisdiction to the court.   

In November 2010, WRD declared a water emergency, which by later resolution expired on June 30, 2011. On December 29, 2010, CBMWD challenged the declared water emergency in a petition for writ of mandate, contending that WRD was required to follow CEQA prior to declaring a water emergency. WRD demurred, and the trial court sustained the demurrer, finding that CBMWD could not state a cause of action under CEQA. The trial court court explained that WRD’s declaration was under the authority granted by the judgment and that although WRD was a public agency in most respects, it was acting as an agent of the court in this situation, and was therefore not subject to CEQA. CBMWD appealed.

The Court of Appeal’s Decision

The court of appeal concluded that the trial court properly sustained WRD’s demurrer to CBMWD’s petition for writ of mandate because CEQA does not apply, and even if it did, it would be trumped by the physical solution governing the Central Basin.

The court explained that CEQA is inapplicable to WRD’s declaration of a water emergency for two separate reasons. First, the declaration of a water emergency by itself has no environmental impact and therefore is not a project within the meaning of CEQA. Instead, the court found the declaration is “a mere statement” that the resources of the Central Basin risk declaration. CBMWD argued that other provisions of the Judgment may trigger significant environmental effects, but the court found that this argument is irrelevant because WRD’s only role was to declare the water emergency. Second, WRD had no discretion to alter the terms of the judgment even if it prepared an EIR and determined that the carryover and delayed replacement would have significant environmental effects. Thus, even if the declaration of the water emergency should be viewed together with its consequences, WRD’s decision was a ministerial act, rather than a discretionary approval triggering CEQA review.  

The court then explained that even if CEQA were applicable, it is trumped by the physical solution imposed in the basin. The court explained that where a court-imposed judgment is in place establishing a physical solution to a groundwater issue, the public agency has no judgmental controls to exercise, i.e. the power to act is reserved to the court. Here, the appellate court explained, the trail court properly denied CBMWD’s petition to mandate compliance with CEQA as it sought to “frustrate the physical solution in the Central Basin.” In particular, through its petition for writ of mandate, CBMWD sought to have WRD exercise its authority in contravention of the judgment by requesting WRD study consequences of the carryover and five-year replenishment, which are terms of the judgment establishing a physical solution (and not subject to WRD’s modification).   

The court declined to consider CBMWD’s remaining arguments because they were not properly raised in the appeal. (Laura Harris)

Fifth District Holds CEQA Review Is Required Where A Lead Agency, Without Holding An Election, Chooses To Approve A Project Submitted To It By Initiative Petition

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The Fifth District Court of Appeal in Tuolumne Jobs & Small Business Alliance v. Superior Court (2012) 210 Cal.App.4th 1006, has held that a city council’s decision to approve a development project under Elections Code section 9412, subdivision (a), is not a ministerial decision and does not exempt the project from the California Environmental Quality Act (CEQA). Where a lead agency approves a project by adopting the text of a voter initiative as an ordinance instead of holding a special election under Elections Code section 9412, subdivision (b), CEQA review is necessary. The court acknowledged creating a split of authority because it did not follow Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961, and certified the relevant portion of the case for partial publication.

Background

Wal-Mart sought to expand an existing store in Sonora and make it into a Wal-Mart Supercenter. The city prepared an environmental impact report (EIR), but postponed its vote on the EIR when it received notice of an initiative petition seeking to approve the construction and operation of the supercenter. On October 18, 2010, the city council held a public hearing to consider the Wal-Mart initiative. After the public hearing, the city council voted to adopt the text of the initiative as an ordinance even though the EIR had not been certified.

Tuolumne Jobs & Small Business Alliance filed a writ of mandate in trial court alleging a violation of CEQA. The trial court sustained a demurrer filed by Wal-Mart with respect to three of the four causes of action. Petitioner then filed a writ of mandate with the appellate court seeking to vacate the superior court’s order sustaining the demurrer. The Fifth District Court of Appeal stayed the trial court proceedings while it considered the petition.

The Court of Appeal’s Decision

As a preliminary matter, the court discussed the grounds for writ relief and the standard of review for demurrers. Then the court turned to the main question of law before it: whether CEQA review is required when a lead agency approves a project by adopting as an ordinance the text of a voter initiative with signatures of at least 15 percent of the jurisdiction’s registered voters.

First, the court noted that “the prerogatives of the electorate when exercising its right of initiative must not be thwarted by procedural constraints” in CEQA or other state laws. Furthermore, the voters’ power to approve an initiative in an election is protected by the California Constitution and cannot be undermined by state laws without clear legislative intent to preempt that power. The court thus framed its interpretation of the statutory language in Elections Code section 9214 as an exercise in selecting a construction that most closely achieves legislative intent.

Second, the court laid out the legal implications of the holding in Friends of Sierra Madre v. City of Sierra Madre (2001) 25 Cal.4th 165, that CEQA review is required even if an election is held where a public agency was the entity that chose to put the initiative on the ballot. The court quoted CEQA Guidelines section 15378, subdivision (b)(3), which was amended after the  Friends of Sierra Madre decision to establish that submittals of voter initiatives not sponsored by a public agency are not “projects” as defined by CEQA, but CEQA review is required for those initiatives that are sponsored by a public agency. The court used section 15378 and the holding in Friends of Sierra Madre to conclude that CEQA clearly applies when a city council approves a project without an election after a “mere 15 percent of voters” expressed support of the initiative.

The court then dismissed arguments that the voters’ constitutional power of initiative or the ministerial-projects exemption would support finding the project was excused from CEQA review. The court found that the city’s decision not to submit the initiative to the voters was a policy decision and an exercise of agency discretion that deprived the voters of the opportunity to make the final decision.

Finally, the court discussed why it chose not to follow Native American Sacred Site & Environmental Protection Assn. v. City of San Juan Capistrano. The court in Native American Sacred Site had held that an agency’s decision to approve a project via adoption of an initiative without holding an election is ministerial because the city was bound by Elections Code section 9414 to either adopt a qualified voter-sponsored initiative or to place it on the ballot. The Fifth District Court of Appeal disagreed, concluding that an agency’s policy decision between two choices is discretionary, even if the agency has a mandatory duty to make a choice. Moreover, it found a crucial distinction between the situation where a city is being compelled to hold an election because it failed to act on a petition and the situation where the city chooses to adopt the initiative without submitting it to the voters in an election. Therefore, the court held that CEQA review is required where a lead agency chooses to approve a project submitted to it by voter initiative under Elections Code section 9214, subdivision (a).

California Supreme Court Holds Coastal Act and Mello Act Apply to Conversions of Rental Mobilehome Parks to Residential Ownership

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On November 29, 2012, the Supreme Court of California in Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles, (2012) __ Cal.4th __ (Case No. S187243) affirmed the judgment of the Second District Court of Appeal, finding a mobilehome park conversion is a “subdivision” under the Subdivision Map Act and also a “development” subject to permitting requirements of the Coastal Act.

The controversy in this case arose after the City of Los Angeles (City) rejected an application from Palisades Bowl Mobile Estates, LLC to convert its 170-unit mobilehome park, which is within the coastal zone, from tenant occupancy to resident ownership. The City asserted Palisades Bowl had failed to include applications for a coastal development permit or for Mello Act approvals. Rather than submit these applications, Palisades Bowl filed a petition for writ of mandate and complaint for injunctive and declaratory relief.

At the trial court, Palisades Bowl argued the proposed conversion from tenant occupancy to resident ownership was not subject to the Coastal Act because it was not a “development” as defined by that act. The trial court agreed and also found that Government Code section 66427.5 precluded the City from imposing conditions and requirements mandated by the Coastal and Mello Acts. The court of appeal reversed the trial court’s decision, and the Supreme Court subsequently granted review.

The Supreme Court’s Decision

i.        The Coastal Act

The Supreme Court first addressed whether the Coastal Act requires a permit for mobilehome park ownership conversions. The Coastal Act requires a coastal development permit for “any development” in the coastal zone. Public Resources Code section 30106 defines “development” as a “change in the density or intensity of use of land, including, but not limited to, subdivision pursuant to the Subdivision Map Act.” The Court pointed out that the Subdivision Map Act specifically refers to mobilehome park conversion as a form of subdivision.

Palisades Bowl argued the conversion of the mobilehome park was not a development under the Coastal Act because it would not alter the density or intensity of land use. The Supreme Court disagreed and cited to Public Resources Code section 30106, which lists “subdivision” in a non-exclusive list of projects subject to the Coastal Act. Furthermore, the Court noted that section 30106 addresses changes in the intensity of land uses. Therefore, Palisades Bowl’s assumption that the Coastal Act only applied to projects increasing density or intensity of use was mistaken.

The Supreme Court held that all subdivisions, even conversions of mobilehome parks that do not immediately alter use of land, are “developments” for the purposes of the Coastal Act. The Court also concluded that a broad interpretation of “development” as used in the Coastal Act is consistent with what the Legislature intended.

ii.      The Mello Act

The Supreme Court next considered whether the requirements of the housing elements law, Government Code sections 65580-65589.8, applies to conversions of residential units within the coastal zone. Under these Government Code sections, local governments are required to adopt a “housing element” as part of their general plans. The housing element must identify and analyze existing and projected housing needs, among numerous other requirements. The Mello Act supplements the housing element requirements by establishing “minimum requirements for housing within the coastal zone for persons and families of low or moderate income.” Specifically, local governments are prohibited from authorizing the conversion or demolition of occupied low or moderate income residential units without making provisions for the replacement of those units.

The Supreme Court held the Mello Act expressly applies to “most conversions” of residential units in the coastal zone, including the conversion of the ownership structure of a mobilehome park.

iii.    The Subdivision Map Act

Lastly, the Supreme Court considered Palisades Bowl’s argument that Government Code section 66427.5 of the Subdivision Map Act exempts mobilehome park conversions from other state laws, regulations, or policies. Palisades Bowl argued that this section prohibits local governmental entities from enforcing compliance with any state law requirements other than those imposed by section 66427.5.

Government Code section 66427.5 imposes several requirements on subdividers and seeks to prevent the economic displacement of all nonpurchasing residents during the conversion of a rental mobilehome park to resident ownership. Part of the procedure required by section 66527.5 involves a hearing before the relevant decision-making body which is limited in scope to the issue of compliance with section 66427.5. Palisades Bowl argued that by limiting the scope of the required hearing, the Legislature intended to define the full extent of local government’s obligation and power to review an application for an ownership conversion of a mobilehome park. By this reasoning, the City lacked authority to reject Palisades Bowl’s application for failure to comply with the Coastal and Mello Acts.

The Supreme Court disagreed with Palisades Bowl, holding Government Code section 66427.5 does not exempt conversions of mobilehome parks to resident ownership from compliance with the Coastal Act and Mello Act. The Supreme Court construed the hearing requirement of section 66427.5 to allow local agencies to establish procedures and conduct additional hearings required by other state laws, including the Coastal and Mello Acts.

 

 

Sixth District Court of Appeal Finds Inadequate EIR’s Description of Project Objectives and Analysis of Alternatives for Amendment to Sphere of Influence

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On November 27, 2012, the Sixth District Court of Appeal in Habitat and Watershed Caretakers v. City of Santa Cruz (2012) __Cal.App.4th __ (Case No. H037545) reversed a trial court’s judgment and directed the City of Santa Cruz to vacate certification of a final EIR for a project to amend the city’s sphere of influence. 

In 2006, the Regents of the University of California (the Regents) adopted a 2005 Long Range Development Plan (LRDP) for the University of California, Santa Cruz (UCSC). The LRDP contemplated the development of the north campus, which was not within the City of Santa Cruz’s (City) territorial boundaries or sphere of influence. The City and other parties brought a CEQA action against the Regents challenging their certification of an EIR for the LRDP, but the parties to the litigation entered into a comprehensive settlement agreement in August 2008.

In October 2008, the City applied to the Local Area Formation Commission (LAFCO) for a sphere of influence (SOI) amendment to include within the SOI the undeveloped north campus portion of UCSC. At the same time, the Regents applied for provision of extraterritorial water and sewer services. The City prepared an EIR for the project of amending its SOI while the applications were pending before LAFCO.

In August 2010, the City certified the final EIR and Habitat filed a petition challenging the certification. The trial court denied the petition, and Habitat appealed.

Assessment of Impacts

i.     Water Supply

The appellate court first turned to the issue of water supply and noted that the draft EIR extensively described the City’s water supply situation. The City had previously considered various strategies for addressing water supply, including conservation, curtailment of use during shortage, and construction of a desalination facility. Ultimately, the draft EIR determined that the City had sufficient supply to serve the project in normal years but would have a water supply shortfall during dry years regardless of growth rate and even without the project’s increased water demand.

Habitat claimed the draft EIR failed to demonstrate that the water required for the development of north campus was available and failed to discuss the environmental consequences of proceeding with the project without adequate water supplies. Citing Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, the court established that an EIR is not required to establish a likely source of water and instead may address reasonably foreseeable impacts of supplying water to the project, acknowledge the degree of uncertainty involved, discuss reasonably foreseeable alternatives, and disclose significant foreseeable environmental effects of each alternative, as well as mitigation measures to minimize each adverse impact. The draft EIR disclosed and discussed these issues, therefore the court found the EIR’s discussion of water supply was adequate.

ii.   Watershed Resources

Habitat asserted that the draft EIR failed to discuss the impact of development of the north campus on erosion in the Cave Gulch watershed. In particular, Habitat argued the final EIR’s reference to a storm water management plan was improper because the plan itself was not included in the final EIR. The appellate court disagreed, noting the draft EIR discussed, described, referenced, and incorporated analysis and mitigation measures discussed in the LRDP EIR. In addition, the final EIR described and referenced relevant portions of the storm water management plan. The court found this approach was proper and did not deprive decision makers of necessary information.

Habitat also argued the draft EIR was inadequate because the City failed to delineate wetlands. The draft EIR explained that the LRDP EIR’s mitigation measures required predevelopment delineation of wetlands. The draft EIR concluded that delineation was not initially required because wetland resources are dynamic and their precise boundaries are likely to change over the 15-year term of the 2005 LRDP. Since the EIR recognized the existence of wetlands and contained protective mitigation measures, the court found wetland delineation was appropriately deferred to project-level environmental review for future individual projects in the north campus.

iii.  Biological Resources

Habitat also argued the EIR was inadequate because the City did not perform necessary studies and analysis to show that future changes in the City’s water supply would not significantly harm biological resources. The appellate court determined this argument failed because the City did not propose to increase its water supply by drawing more water from its existing sources in order to meet water demand from North Campus. Instead, the City proposed to meet the campus needs through conservation, curtailment and possible construction of a desalination facility. The court found the EIR did not need to analyze impacts from the City’s current water usage from existing sources because they are not impacts of the project and would occur even without the project.

Description of the Project and its Objectives

Habitat argued that the draft EIR’s description of the project’s primary objective were incorrect because the draft EIR stated the comprehensive settlement agreement required the City to provide water and sewer services to the north campus when the agreement actually required the City only to initiate a LAFCO application for an amended SOI.

The appellate court first noted the comprehensive settlement agreement did not leave the City with any discretion because it obligated the City to provide water service if LAFCO approved the City’s SOI application and the Regents’ application. Thus, the court found the purpose of the final EIR was to provide LAFCO with information about the environmental consequences of their decision.

Finally, the court agreed with Habitat, finding the statements of the project’s objectives in the EIR failed to describe the purpose of the project and only described the nature of the project. Given the misstated project objectives, the court next considered whether these misstatements skewed the consideration of alternatives and mitigations.

Range of Alternatives

Habitat argued the EIR’s discussion of alternatives was inadequate because it failed to consider any alternatives that would avoid some of the significant environmental impacts of the project. Habitat argued analysis of a reduced-development alternative or a limited-water alternative was required. The court agreed, holding that consideration of the proposed alternatives could not be eliminated solely because they would “impede to some extent the attainment of the project’s true objectives.” Because the EIR failed to discuss any feasible alternative, the court determined it did not comply with CEQA.

Mitigations

Finally, Habitat argued that the EIR failed to provide specific, certain, and enforceable mitigation measures for the Project’s significant and unavoidable impacts on water supply. The appellate court disagreed. The draft EIR incorporated numerous mitigation measures from the LRDP EIR. In addition, the comprehensive settlement agreement required the Regents to implement a group of high priority conservation measures which the appellate court determined were specific and certain. The court found it sufficient that these mitigation measures addressed the impacts of the project on the City’s water supply; it rejected Habitat’s argument that the mitigation measures were required to address the City’s overall water supply shortfall. [RMM Counsel of Record: James G. Moose, Sabrina V. Teller, Jeannie Lee]

California Chamber of Commerce Sues to Invalidate AB 32 Cap-and-Trade Program

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On November 13, 2012, the California Chamber of Commerce filed a petition seeking to block the California Air Resources Board (CARB) from auctioning carbon allowances. The complaint, filed in a Sacramento state court, asserts that CARB lacks the authority under AB 32 to raise money beyond what is needed to cover its administrative costs of implementing a state emissions regulatory program.

The Chamber argues that the California Legislature never authorized CARB to raise fees or taxes through an auction mechanism. Therefore, the program constitutes an unauthorized and unconstitutional tax according to the Chamber. The Chamber cites the California Constitution, which requires a two-thirds vote of the Legislature to raise taxes. In prepared statements regarding the suit, the Chamber states the current CARB proposal “is the most costly way to implement AB 32” and that it will “hurt consumers, the job climate, and the ability of business to expand” in California. The Chamber argues other states will decline to follow California’s AB 32 as a model if it is not designed to be the most cost effective way of reducing carbon emissions.

In the suit, the Chamber did not seek a court order blocking the first auction set for November 14, 2012, and state officials indicated the sale would proceed as scheduled. An affiliate of the Chamber indicated that the organization is trying to eliminate future auctions, which are set for regular intervals over the next eight years. Tim O’Conner, director of the Environmental Defense Fund’s California Climate and Energy Initiative noted that the Chamber’s filing of the suit on the eve of the first auction “seems quite unsavory” and could dampen California’s comprehensive program to curb greenhouse gases. The Chamber insisted the suit was not filed in relation to the specific auction scheduled for November 14, 2012.

CARB spokesperson Stanley Young indicated that the agency is confident the cap-and-trade program will withstand any court challenge. CARB believes the market-based approach to cutting greenhouse emissions gives California business flexibility to best decide now to reduce emissions.

The court must decide whether the auction should be viewed as a tax and whether AB 32 granted CARB discretion to design a mechanism, such as cap and trade, to curb the state’s greenhouse gas emissions. Considering that the Legislature passed legislation directing the State’s Department of Finance and CARB to develop a plan to invest auction proceeds and to set up an account for the deposit of auction funds, it seems the Chamber may have a difficult time convincing a court that the Legislature intended to limit CARB’s discretion in a way that would prohibit the auction of allowances for a cap-and-trade program designed under AB 32.

Third District Court of Appeal Finds Plaintiff’s Claims Time-Barred under Government Code Section 65009 Because the Suit was not Commenced Within 90 Days After Project Approval

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On November 13, 2012, the Third District Court of Appeal in Stockton Citizens for Sensible Planning v. City of Stockton (2012) __Cal.App.4th__ (Case No. C067164) affirmed a trial court’s judgment that claims brought under the State Planning and Zoning Law were time-barred because the suit was not commenced within 90 days after the City of Stockton approved the project at issue.

On February 17, 2004, the City filed a Notice of Exemption (NOE) regarding the City’s approval of a shopping center project. The NOE identified the project location and indicated that it fell within a fully entitled master planned development adopted on January 9, 2002. The City determined the site plan, grading plan, landscaping plan, and building elevations and design conformed to standards set forth in the master development plan. The City took the position that these determinations of compliance constituted ministerial actions not subject to CEQA review.

On July 22, 2004, the plaintiffs filed a petition for writ of mandate alleging that the City violated CEQA and planning and zoning laws. The Supreme Court ultimately held that the CEQA claims were untimely under the 35-day limitations period set forth in Public Resources Code, section 21167, subdivision (d). The Supreme Court declined to address the timeliness of the remaining causes of action, as neither the trial court nor the Court of Appeal had ruled on the issue. The remaining claims were remanded, and the trial court granted the City’s motion for judgment on the pleadings, holding the non-CEQA claims were barred by Government Code, section 65009, subdivision (c)(1)(E) because they were not brought within 90 days after the City’s approval of the project. The plaintiffs appealed.

On appeal, plaintiffs argued a letter of approval issued for the project did not trigger the 90-day statute of limitations because it was not a permit issued after a decision by a legislative body of the City. The appellate court found that plaintiffs’ argument ignored the express language of Government Code, section 65009, subdivision (c)(1)(E). This subdivision states that the 90-day limitations period applies to actions or proceedings “[t]o attack, review, set aside, void, or annul any decision on the matters listed in Sections 65901 and 65903…” Section 65901 enumerates the powers of the board of zoning adjustment or zoning administrator and states. In part, “The board of zoning adjustment or the zoning administrator may also exercise any other powers granted by local ordinance.”

The court determined the Stockton City Council, by local ordinance, created the office of Community Development Department Director and vested with this office the authority to review development projects “in compliance with” section 65901. The letter of approval was issued by the City’s Director, who the court found clearly qualified as the City’s “zoning administrator.”

The court also rejected the plaintiffs’ assertion that the Director’s letter or approval did not trigger the limitation period because section 65009 is only applicable to the decision of a legislative body. The appellate court found, when considered as a whole, the language of section 65009 supports a finding that the Legislature intended to include decisions by zoning administrators in the 90-day limitations period.

Finally, the plaintiffs argued the application of Government Code section 65009 requires a public procedure and an opportunity for hearing. Plaintiffs asserted this requirement was implied in the section. Real Parties pointed out that this assertion is refuted by the statute’s express language. Section 65009, subdivision (c)(1)(e), specifically applies to matters listed in section 65901. Section 65901 distinguishes cases involving the authority to hear and decide applications for conditional uses or other permits from the exercise of other powers granted by local ordinance. Additionally, section 65901 expressly authorizes local jurisdictions to allow the grant of certain variances without a public hearing. The appellate court agreed. After finding the plaintiffs’ planning and zoning claims time-barred, the court dismissed the remaining derivative claims.

California Air Resources Board Conducts Auction for Cap-And-Trade Program

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On November 14, 2012, the California Air Resources Board will conduct its first quarterly auction for greenhouse gas allowances under the cap-and-trade program, which is identified in the Assembly Bill 32 Scoping Plan as one of the strategies California will employ to reduce the greenhouse gas emissions that cause climate change.

In 2006, the Legislature passed and Governor Schwarzenegger signed AB 32, the Global Warming Solutions Act of 2006, which requires California to reduce greenhouse gas emissions to 1990 levels by 2020. In complying with AB 32, CARB prepared a Scoping Plan identifying a cap-and-trade program as one of the strategies California will use to reduce the GHG emissions that cause climate change. The cap-and-trade program places a limit on the GHG emissions allowed from pollution producers like refineries and cement manufacturers, and directs all entities subject to the cap (covered entities) to surrender “compliance instruments” equivalent to their GHG emissions to CARB. Compliance instruments include both allowances, which are allocated by CARB or obtained from auctions or secondary markets, and offset credits, which represent GHG emissions reductions achieved in sectors that are not subject to the cap.

This year, the cap-and-trade program covers about 350 industrial businesses operating a total of 600 facilities throughout the state. They include cement plants, steel mills, food processors, electric utilities, and refineries. Starting in 2015, the program will also cover distributors of natural gas and other fuels. For the first two years of the cap-and-trade program, covered entities will receive 90 percent of their allowances for free, with the free amount and the cap declining over time. Covered entities must either cut their GHG production to that level or buy credits to make up the difference. Companies that have more credits than they need can sell them at the auction, and CARB will sell additional credits as well. The proceeds from CARB’s sale of allowances sold at auction will be deposited in CARB’s Air Pollution Control Fund, awaiting appropriation by the Legislature.

The November 14, 2012, auction is the first, major step for CARB in implementing the cap-and-trade program. Though there remains strong opposition to the program from those businesses required to participate in it, CARB’s completion of this first auction signifies its commitment and readiness to enforce compliance with the cap-and-trade program when it comes online in January 2013.

Fourth District Court of Appeal Holds a City May Adopt Revisions to Its Housing Element That Create Inconsistencies With the General Plan If the City Also Adopts a Timeline for Proposed Changes to the General Plan That Correct Those Inconsistencies

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On November 1, 2012, the Fourth District Court of Appeal in Friends of Aviara v. City of Carlsbad (2012) __ Cal.App.4th __ (Case No. D060167), affirmed the trial court’s judgment directing the city to adopt a timeline for proposed changes to its general plan that would correct inconsistencies created by the city’s revision of its housing element. The appellate court found that Government Code section 65583 establishes an exception to the requirement that general plans be facially consistent, as long as the municipality identifies a program with a timeline for resolving any inconsistencies arising from its adoption or revision of a housing element.

Pursuant to the Housing Element Law, the California Department of Housing determines the number and type of housing units each region of the state must provide, and regional planning bodies like the San Diego Association of Governments determine what percentage of the regional allocation individual municipalities must provide. On December 22, 2009, the city council of Carlsbad adopted proposed revisions to the housing element of its general plan to comply with Government Code section 65583. The city council also certified a mitigated negative declaration (MND) because it found the revision would not have a substantial environmental impact. The city’s housing element revisions included an assessment of housing needs and an inventory of sites which could accommodate the city’s assigned share of the region’s low cost housing needs. The adopted revision also identified several amendments to the general plan’s land use element that would be necessary to permit development of affordable housing on the specified sites at higher minimum densities than permitted in the existing version of the land use element.

Friends of Aviara challenged the city’s adoption of the housing element revision, alleging the MND violated CEQA and the revision impermissibly created inconsistency in the general plan. The trial court denied the CEQA claim, but found that the revision did create an improper conflict between the housing element and the land use element of the general plan. Consequently, the trial court issued a writ of mandate directing the city to adopt a timeline for the proposed amendments to the land use elements. Friends of Aviara appealed, contending that adopting a timeline for proposed amendments was not enough to remedy the defect in the revision and that the trial court should have required the city to rescind its adoption of the revision.

The appellate court’s analysis focused on Government Code section 65583, subdivision (c)(7), which requires a housing element to include “an identification of the agencies and officials responsible for the implementation of the various actions and the means by which consistency will be achieved with other general plan elements and community goals.” (Gov. Code, § 65583, subd. (c)(7), italics added.) The court concluded that the Legislature’s use of the future tense in the statute demonstrated a “legislative preference that municipalities promptly adopt housing plans which meet their numerical housing obligations even at the cost of creating temporary inconsistency in general plans.” Therefore, the Fourth District Court of Appeal held the trial court properly required the city to adopt a timeline for the proposed amendments to the general plan’s land use element and was not required to order the city to rescind its adoption of the housing element revision to remedy the resulting inconsistencies in the general plan.

Second District Court of Appeal Holds That Placing a Measure on the Ballot to Establish a Competitive Bidding Process for a City’s Future Waste Disposal Contracts Does Not Constitute a “Project” Under CEQA.

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On October 23, 2012, the Second District Court of Appeal issued its decision in Chung v. City of Monterey Park (2012))       Cal.App.4th     (Case No. B233859).  The court held that a city council’s approval of a ballot measure seeking voter approval of a competitive bidding process for residential trash service was not a “project” within the meaning of the CEQA.

Factual and Procedural Background

The Monterey Park City Council voted to place Measure BB on the March 8, 2011 municipal ballot without performing any type of environmental review under CEQA.  No initial study was prepared, and there was no Notice of Exemption.  Measure BB requires that the City seek competitive bids for trash service when the City’s current contract expires in 2017, and thereafter requires that the City competitively bid for trash service every five years.  Opponents of Measure BB argued that the measure was a “project” under CEQA and that environmental review was required before the measure could be placed on the ballot.  Measure BB, among other things, would require the City Council to award the residential solid waste franchise to a single franchisee, but the City Council would also have the discretion to award the commercial solid waste franchise to up to three franchisees.  Therefore, Measure BB raised concerns about air quality, noise pollution and road damage that would likely result from an increase in the size of the solid waste contractor fleet serving the City. On March 8, 2011, City voters approved Measure BB, with over 71 percent voting in favor of establishing a competitive bidding process. 

Wing Chung, a city resident, filed a petition for writ of mandate, alleging that Measure BB was a “project” subject to CEQA, and that the City violated CEQA by failing to make any decision as to whether Measure BB would have a significant impact upon the environment, failing to consider any alternatives or mitigation measures, and failing to conduct the requisite informed decision-making under CEQA. 

The trial court disagreed and determined that Measure BB was not a “project” within the meaning of CEQA and therefore the measure did not require environmental review before being placed on the ballot.  

Court of Appeal’s Decision

The Court of Appeal began its analysis by navigating through the statutory definition of a “project” and the extensive case law on the subject. Citing CEQA Guidelines section 15378, subdivision (b)(4), the court noted that the definition of a  “project” does not include the “creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.” The court determined that placing the ballot measure on the ballot fit within that definition. The ballot measure merely established a competitive bidding process for future waste services contracts, and the new manner of awarding such contracts is a fiscal activity that does not involve a commitment to a specific project. As such, the measure is not a project within the meaning of CEQA.

The court placed emphasis on distinguishing the seminal case Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, where the City of West Hollywood conditionally agreed to allow a private developer to redevelop property for senior housing predicated on future compliance with CEQA. There, the fatal flaw in the City of West Hollywood’s decision was that the city had “committed itself to a definite course of action regarding the project before fully evaluating its environmental effects.” (Id. at p. 142.) The court explained that this case was different because the City has not committed itself to any particular course of action. Measure BB does not require the City to select more than one service provider and does not preclude the City from providing solid waste services by itself. 

In addition, the court noted that Measure BB requires the City Council to hold one or more public hearings before deciding whether to grant one or more solid waste franchises.  Thus, at the time Chung filed the lawsuit it was unknowable which companies would bid on the contract, what additional trucks would be required (if any), or what significant impacts the City’s choice of service provider(s) may have in 2017.  The court held that, at this juncture, environmental review of Measure BB would be meaningless because there is simply not enough specific information about the various courses of action available to the City to warrant review at this time.

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