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Fourth District Court of Appeal Upholds Denial of Anti-SLAPP Motion to Strike Malicious Prosecution Claim in CEQA Lawsuit with Respect to Defendants, but Not Their Attorneys

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In Dunning v. Johnson (2021) 64 Cal.App.5th 156, a project developer (“Cal Coast”) sued defendant Clews Horse Ranch (“the Ranch”) and its attorneys (“attorney defendants”) for malicious prosecution in response to the Ranch’s earlier lawsuit alleging that the City of San Diego violated CEQA by approving and adopting a mitigated negative declaration for Cal Coast’s project. In response, the defendants filed an anti-SLAPP motion, which the trial court denied. The Fourth District Court of Appeal affirmed the motion’s denial with respect to the Ranch, but reversed the denial with respect to the attorney defendants.

Background

In the underlying action, Clews Land and Livestock, LLC v. City of San Diego (2017) 19 Cal.App.5th 161 (“Clews”), Cal Coast sought approval from the city to build and operate a school on its property, adjacent to Ranch property. Concluding that significant environmental impacts either were not present or would be mitigated, the city did not prepare an EIR. Instead, it adopted a MND and approved the project. The Ranch argued that the project would adversely affect the surrounding environment, that it would interfere with the Ranch’s operations, and that the city’s use of a MND was improper. The attorney defendants, on behalf of Ranch, appealed the approval of the project, but failed to timely appeal the city’s adoption of the MND. The city rejected the appeal.

The Ranch then sought a writ of mandate to compel the city to abandon the project and set aside the MND, arguing that the city’s procedure for preparing and adopting the MND violated CEQA. Additionally, it challenged the city’s appeal process for environmental findings. The trial court denied recovery on both procedural and substantive grounds, and the court of appeal affirmed.

Upon the conclusion of Clews, Cal Coast brought a malicious prosecution action against the Ranch and the Ranch’s attorneys, alleging that the CEQA action had been brought for an improper purpose. Cal Coast alleged that the Ranch simply sought to prevent or delay the project and preserve the Ranch owner’s privacy to enable criminal activity on the premises. (The Ranch owner pled guilty and was sentenced to prison in 2018 for child pornography charges.) Cal Coast also argued that the attorney defendants had maintained the case in an effort to force the Project’s abandonment, hoping to avoid a legal malpractice claim or a complaint to the State Bar for their failure to timely appeal the adoption of the MND. The defendants filed an anti-SLAPP motion to strike the malicious prosecution claim. The trial court denied the anti-SLAPP motion and the defendants appealed.

The Court of Appeal’s Opinion

To defeat the anti-SLAPP motion, Cal Coast simply needed to show minimal merit in its malicious prosecution claims that the CEQA action in Clews was brought without probable cause and with malice. This court held that Cal Coast met its burden with respect to the probable cause question. However, it concluded that Cal Coast could only point to evidence of malicious action by the Ranch, and not by the attorney defendants.

The court emphasized evidence in the administrative record showing that the Ranch’s concerns about the project were rooted in its potential impacts on the Ranch specifically, rather than on the environment. The Ranch’s concerns were therefore not within the scope of CEQA. The court additionally noted that the Ranch generally did not point to substantial evidence supporting a fair argument that the project could have a significant environmental impact. Under Preserve Poway v. City of Poway (2016) 245 Cal.App.4th 560, this showing is required to establish a MND’s insufficiency. The speculation, arguments, and opinions posited by the Ranch did not constitute substantial evidence. The court therefore concluded that Cal Coast established a probability for prevailing on the question of probable cause.

The court also noted the Ranch’s aggressive and consistent efforts to oppose any use of the proposed project site, including by prior owners of the property. It thus concluded that Cal Coast introduced sufficient evidence of the Ranch’s malice to survive the anti-SLAPP motion with respect to the Ranch. However, the court determined that there was not sufficient evidence to conclude that the attorney defendants acted maliciously, as there was no indication that the attorneys were actually aware of either the Ranch’s improper motives or the untenability of the Ranch’s claim. Cal Coast’s speculation that the attorney defendants were merely acting to avoid a malpractice claim or a State Bar complaint was insufficient to support a finding that the attorney defendants acted maliciously in maintaining the CEQA claims in Clews.

– Louisa I. Rogers

SB 7 – Jobs and Economic Improvement Through Environmental Leadership Act of 2021

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On May 20, 2021, Governor Gavin Newsom signed Senate Bill (SB) 7, known as the Housing + Jobs Expansion & Extension Act. SB 7 extends the provisions of legislation enacted in 2011 (Assembly Bill 900) that created an expedited judicial review process under CEQA for large development projects that met certain criteria. AB 900 was repealed by its own terms on January 1, 2021.

SB 7 reenacts and updates AB 900 in order to “expedite the development and construction of urgently needed housing, clean energy, low carbon, and environmentally-beneficial projects, and the jobs they create.” The bill notes that numerous large projects under consideration in California have the potential to create thousands of high-skill, high-wage jobs. Many of these projects will replace old and outdated facilities with newer, cleaner, and innovative facilities that will lead the nation in environmental impact mitigation and reduction.

Thus the bill streamlines and facilitates development projects in a number of ways. First, the Governor may certify a project before the lead agency certifies a final EIR. Second, the environmental review, administrative process, and record of proceedings may be prepared concurrently. Third, the project applicant must agree to pay trial court costs if the lead agency’s certification is challenged. Fourth, to the extent feasible, judicial review of lead agency action must conclude within 270 days once commenced. Finally, the Bill extends the benefits of AB 900 to those projects that were certified by the Governor before AB 900’s expiration and by the lead agency within one year of AB 900’s expiration.

In order to be eligible for streamlined certification, a project must fall into at least one of the following categories. It must be on an infill site, certified as LEED Gold (or better), and able to achieve a 15% improvement in transportation efficiency. Or it must be a clean energy project that either generates power exclusively through wind or solar energy or manufactures equipment used in renewable energy production. Or it must be a housing project on an infill site that will dedicate at least 15% of the development to affordable and low-income housing. Although it may include mixed-use development—assuming at least two-thirds is residential—or transitional housing, no part of a certified housing project may be used for transient lodging, manufacturing, or industrial uses.

Regardless of the category it falls into, the project must meet certain criteria. First, it must result in at least $100 million in investment in California (except for housing projects, which must result in an investment of between $15 million and $100 million). It must also create high-wage and high-skill jobs that help reduce unemployment and encourage apprenticeship training. And, at a minimum, it must not lead to a net increase in greenhouse gas emissions, including from employee transportation. Finally, the project applicant must agree to monitoring and enforcement of its mitigation efforts by the lead agency.

SB 7 aims to boost California’s economic recovery by creating more and better housing and jobs, and doing so in an environmentally sustainable way. As Governor Newsom noted when he signed the legislation, “California’s recovery from the pandemic must tackle the housing shortage that threatens our economic growth and long-term prosperity. Cutting red tape to save time and remove barriers to production helps us meet the urgent need for more housing while creating good jobs and preserving important environmental review.” Indeed, AB 900 had already led to roughly twenty major clean energy and housing projects, 10,000 housing units, and thousands of high paying jobs. Proponents of SB 7 hope its passage will continue this trend.

The Governor’s press release is available here: https://www.gov.ca.gov/2021/05/20/in-san-jose-governor-newsom-signs-legislation-to-fast-track-key-housing-economic-development-projects-in-california/

– Blake C. Hyde

First District Court of Appeal Reverses Denial of Mixed-Use Affordable Housing Project’s Ministerial Approval Under Government Code Section 65913.4

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In Ruegg & Ellsworth v. City of Berkeley (2021) 63 Cal.App.5th 277, the First District Court of Appeal reversed the trial court’s denial of appellants’ petition filed after their application for ministerial approval of a mixed-use affordable housing development was denied under Government Code section 65913.4. Finding that the trial court improperly applied a deferential standard of review, the court held that the ministerial approval did not conflict with the City’s “home rule” authority over historic preservation or commercial uses and did not involve demolition of a historic structure that was placed on a historic register.

Background

In 2015, appellants submitted an application for a mixed-use development (the “Project”) in the City of Berkeley (the “City”). The Project is located in the West Berkeley Shellmound, an area designated as a City of Berkeley Landmark and listed in the California Register of Historical Resources. The Shellmound is a sacred burial ground from early native habitation and includes subsurface artifacts, but no above ground buildings or structures. In November 2016, the Berkeley Planning and Development Department (the “Department”) prepared a Draft Environmental Impact Report for the Project application, which concluded that the Project’s impacts on the Shellmound would be reduced to less-than-significant with mitigation measures.

On January 1, 2018, Senate Bill (“SB”) 35 went into effect, which added section 65913.4 to the Government Code. Section 65913.4 requires a streamlined ministerial approval process and an exemption from a conditional use permit for certain affordable housing projects when a locality has failed to provide its share of “regional housing needs, by income category.” In March 2018, appellants submitted an application pursuant to section 65913.4 for the development of 260 dwelling units, 50 percent of which would be “affordable to low-income households,” and retail space and parking. In April 2018, appellants asked the City to suspend processing of the use permit and California Environmental Quality Act documentation for the Project.

On June 5, 2018, the Department provided appellants with the required written response pursuant to section 65913.4, subdivision (b)(2), stating that SB 35 does not apply to the Project because it impinges on “legitimate municipal affairs”— the preservation of a designated City landmark. The Department nonetheless explained that several components of the application were inconsistent with the criteria for approval under section 65913.4. The Department denied the application for ministerial approval after appellants responded to each of the City’s points. Appellants subsequently filed suit.

The Court of Appeal’s Opinion

Demolition of a Historic Structure

The court determined that section 65913.4 is not a historical preservation statute and the term “structure” in section 65913.4, subdivision (a)(7)(C) does not include historical resources or sites. The court reasoned that section 65913.4 thus protects cultural resources differently from historic structures placed on a historic register; a project that threatens the former may obtain ministerial approval if there are no tribal objections, while the latter is ineligible for ministerial approval. While the court acknowledged that the Shellmound is an important historical and cultural resource, it concluded there is no evidence that it is a structure, let alone one that could be demolished by the Project.

Retroactive Application of AB 831’s Tribal Cultural Resource Protections

The court also refused to apply Assembly Bill (“AB”) 831’s tribal cultural resource protections retroactively to the Project application. It determined that the Legislature deliberatively allowed for some projects to proceed without tribal consultation to account for the interests of those who relied on section 65913.4 prior to AB 831’s effective date. The court held that it would be contrary to the Legislature’s intent and manifestly unfair to apply AB 831 retroactively.

The City’s “Home Rule” Authority Over Historic Preservation

Emphasizing the Legislature’s long history of frustration with local governments’ interference with addressing the statewide housing crisis, the court concluded that applying section 65913.4 would not interfere with the City’s “home rule” authority over historic preservation. Determining whether a matter falls within a charter city’s authority to govern itself free of state legislative intrusion requires the court to consider four issues: (1) whether the city ordinance at issue regulates an activity that can be characterized as a municipal affair; (2) whether there is an actual conflict between local and state law; (3) whether the state law addresses a matter of statewide concern; and (4) whether the law is reasonably related to resolution of that concern and narrowly tailored to avoid unnecessary interference in local governance.

The court dismissed the first three parts of the “home rule” test as essentially undisputed. As for the fourth part of the test, the court determined that section 65913.4 is reasonably related to resolving the statewide interest it addresses—affordable housing—and does not unduly interfere with the City’s historical preservation authority. Citing the legislative findings in Government Code section 65589.5, the court concluded that section 65913.4 is narrowly tailored because historical preservation is precisely the kind of subjective discretionary land use decision that the Legislature sought to prevent localities from using to defeat affordable housing development.

Applicability to Mixed-Use Developments

The court held that section 65913.4 applies to mixed-use development projects. The court rejected respondents’ argument that the statute is limited to projects located on sites that meet the minimum residential requirement for mixed-use developments, rather than the actual development that is the subject of the ministerial approval application. The court concluded that the Project at issue satisfied the two-thirds residential requirement, as it includes a residential area that would occupy 88 percent of the development space. The court further explained that regardless of whether the Project should be deemed consistent with this requirement, it is consistent with the standard due to the Department’s failure to timely raise any conflict with respect to the mixed-use aspect of the application in its letter.

The City’s “Home Rule” Authority to Regulate Commercial Uses

The court rejected respondents’ argument that applying section 65913.4 to mixed-use developments interferes with the City’s authority to regulate commercial uses. Applying the “home rule” test, the court found that any interference of section 65913.4 with the local regulation of commercial uses is minimal and incidental to the statute’s purpose of facilitating development of affordable housing. The court acknowledged that the overall Project would not be subject to a conditional use permit, but nothing in the statute permits ministerial approval of a Project with commercial uses that conflict with local zoning.

Conflict with the City’s AHMF and Traffic Capacity Requirements

The court also concluded that respondents’ Affordable Housing Mitigation Fee (“AHMF”) requirements and traffic zoning standards did not provide a sufficient basis for denial of ministerial approval. The court reasoned that the statewide interest served by section 65913.4 should not be defeated by the local AHMF ordinance, which requires a lower percentage of low-income housing than the Project involves. Additionally, the court determined that the traffic zoning standards did not constitute “objective standards” pursuant to section 65913.4 and the City failed to provide adequate written documentation of potential conflicts with any specific criterion for measuring traffic impacts.

Third District Court of Appeal Holds That a Responsible Agency’s Decision to Prepare a Supplemental EIR Does Not Require It to Step in as a Lead Agency

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In California Coastkeeper Alliance v. State Lands Commission (2021) 64 Cal.App.5th 36, the court upheld the State Lands Commission’s decision to prepare and approve a supplemental Environmental Impact Report for the proposed Lease Modification Project for the Poseidon desalination plant in Huntington Beach, California. The court concluded that the Commission did not engage in piecemealing, improper deferral of environmental review or inadequate consideration of alternatives, and was not required under California Code of Regulations, title 14, section 15052, subdivision (a)(2) (“CEQA Guidelines”) to step in as the lead agency for the lease modification.

Background

In 2010, the City of Huntington Beach approved a subsequent EIR to the initially certified 2005 EIR for the desalination project. There were no legal challenges to the 2010 subsequent EIR.

In 2015, the State Water Resources Control Board amended its Water Quality Control Plan to include a Desalination Amendment, which updated methods for intake and discharge systems in desalination facilities. The Desalination Amendment also required the Regional Water Quality Control Board to conduct an analysis under Water Code section 13142.5, subdivision (b) of all new and expanded desalination facilities and required that the owner or operator evaluate a reasonable range of nearby sites for subsurface intakes. In response, Poseidon modified the project in 2016 and 2017 to include (1) one-millimeter steel screens on the offshore intake pipeline to reduce impingement and entrainment; (2) three-port diffusers to diffuse brine discharge reentering the ocean; and (3) a reduction of the seawater intake volume of the Project by 45.3 million gallons per day.

In 2017, the Commission, as a responsible agency, elected to prepare a supplemental EIR for the proposed lease modification project, which incorporated the 2010 subsequent EIR by reference. California Coastkeeper Alliance filed a petition for writ of mandate challenging the certification of the 2017 EIR.

The Court of Appeal’s Opinion

Decision to Prepare a Supplemental EIR

The court determined that substantial evidence supported the Commission’s decision to prepare a supplemental EIR instead of a subsequent EIR. Pursuant to CEQA Guidelines section 15163, the 2017 version of the project consisted of only minor additions or changes from the 2010 version. Therefore, the Commission did not prejudicially abuse its discretion.

Assuming the Lead Agency Role

Rejecting the petitioners’ contention that the Commission was required to assume lead agency status under CEQA Guidelines section 15052, the court concluded that this requirement was inapplicable. A proper determination to prepare a supplemental EIR, rather than a subsequent EIR, removes the subsequent environmental review from the scope of CEQA Guidelines section 15052. Thus, the Commission was not required to step in as the lead agency. The court also rejected the petitioners’ argument that the Commission “acted like” a lead agency during the review process, stating that it acted like a responsible agency because a supplemental EIR is subject to the same notice and public review requirements as the initial draft EIR.

Piecemealing

Petitioners claimed that the Commission illegally piecemealed the project by only reviewing the lease modification project, and not the entire desalination project. The court explained, however, that the 2017 EIR incorporated by reference the 2010 EIR, which was never challenged and thus presumed to comply with CEQA for purposes of use by the Commission. The Commission was thus only required to analyze the changes to the project since the 2010 subsequent EIR, which it did. Further, the court rejected the petitioners’ contention that the Commission deferred parts of the environmental review analysis to other agencies. Again, the Commission satisfied its requirements by analyzing the impacts associated with the proposed enhancements to the project in combination with the previously analyzed impacts.

Consideration of Alternatives and Current Conditions

Petitioners also challenged the Commission’s consideration of alternatives to the project on several grounds, all of which the court rejected. Pursuant to CEQA Guidelines section 15126.6, the court concluded that the 2017 supplemental EIR considered a reasonable range of alternatives, including an intake pipeline extension and a two-port brine diffuser. The court held that the Commission was not required to reevaluate alternatives that were considered and rejected in the 2010 subsequent EIR, nor was it required to consider alternatives beyond those relevant to the proposed modifications.

The court also dismissed the petitioners’ assertion that changes in Orange County’s water needs supplanted the need for the project because they failed to lay out evidence in support of their position, which was fatal to their claim. Even if they had provided evidence in support of their claim, the court reasoned, substantial evidence in the record supported the Commission’s conclusion that Orange County still needed the project to add to its water supply.

Lastly, the court determined that the Commission was not required to consider the Orange County Water District’s (“OCWD”) construction of a new water distribution option involving injection wells and pipelines as a reasonably foreseeable project change. Based on the record, the court concluded that any consideration by OCWD of a different water distribution system than what was reviewed in the 2010 EIR was merely speculative and not reasonably foreseeable. The court held that the Commission had no way to know the particulars of a potential new distribution system, and therefore an EIR could not provide meaningful information on such a speculative change.

First District Court of Appeal Rejects CEQA Claims for Failure to Exhaust Administrative Remedies and Finds General Plan Arguments Not a CEQA Issue

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In Stop Syar Expansion v. County of Napa (2021) 63 Cal.App.5th 444, a partially published opinion, the First District Court of Appeal upheld the trial court’s denial of a writ petition challenging the EIR for an expansion of Syar Industries, Inc.’s aggregate operation in Napa County. The court concluded that the petitioner, Stop Syar Expansion (SSE), failed to exhaust its administrative remedies because it did not comply with Napa County’s local appellate procedures. In addition, the court held that SSE’s argument that the project is inconsistent with the County’s General Plan was not a CEQA issue and SSE therefore failed to properly raise the issue. Further, the court determined that SSE’s argument lacked merit because the County had adequately addressed potential inconsistency issues and reached a reasonable conclusion that the project was consistent with the General Plan.

Exhaustion Doctrine

Citing Tahoe Vista Concerned Citizens v. County of Placer (2000) 81 Cal.App.4th 577 (“Tahoe Vista”), the court emphasized that the burden is on the petitioner in a CEQA case to demonstrate that it exhausted its administrative remedies prior to filing suit by complying with the procedures applicable to the public agency in question. SSE was therefore required to demonstrate that it complied with the procedures in chapter 2.88 of the Napa County Code of Ordinances by timely filing a notice of intent to appeal and timely submitting an appeal packet which specifically identified the grounds it raises in its petition. The court noted that a list of string-cites to the administrative record without explanation as to how each citation supports the assertion the public agency was fairly apprised of the asserted noncompliance with CEQA, is not sufficient to meet the petitioner’s burden.

Consistency with the County’s General Plan

The court also addressed SSE’s contention that the EIR failed to consider whether the project was consistent with the County’s General Plan. The court held that the issue, as presented by SSE, was not a CEQA issue. Thus, the mandate procedures provided for CEQA violations under Public Resources Code section 21168.9 did not apply. SSE was therefore required to assert this cause of action under Code of Civil Procedure section 1085 for ordinary mandamus. SSE failed to ask for leave to amend its writ petition to add a cause of action under section 1085 in the trial court, and therefore, the claim was not properly before the court.

Further, the court noted, the standard of review for an agency’s consistency determination with its own General Plan is highly deferential to the agency. Such a decision can only be reversed if it is based on evidence from which no reasonable person could have reached the same conclusion. The court concluded that SSE did not make any General Plan inconsistency arguments based on this applicable standard of review. The court rejected SSE’s contention that it was not challenging the County’s substantive consistency determination and that a different standard of review should apply because SSE had argued that the EIR failed to disclose inconsistencies with the General Plan.

Finally, even if SSE had made its arguments under the proper standard—which the court reiterated it did not—the court held that the County addressed the project’s consistency with the General Plan at length in both the EIR and in a “General Plan Consistency Analysis.” The court concluded by noting that it is not the court’s place to “micromanage” the County’s determination whether a project is consistent with its own General Plan.

More California Cities Eliminate Parking Minimums to Promote Low Carbon Transportation and Affordable Housing

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Cities in California are eliminating parking minimum requirements and beginning to implement parking maximums for new construction projects. The hope is that these changes will promote low carbon modes of transportation, such as public transit, biking, and walking and increase affordable housing.

Parking minimums are deeply rooted in planning regulations and city codes. Proponents of eliminating these requirements emphasize that parking minimums can contribute to an overreliance on automobiles, which stunts progress toward more walkable and public transit-oriented development and planning. There is also concern that parking minimums contribute to urban sprawl because the physical space required for parking forces new developments farther from city centers, and that parking minimums encourage less dense development. These concerns have prompted numerous cities throughout the state to revisit their parking policies.

For example, in January 2021, the Sacramento City Council voted to approve citywide zoning reforms in its General Plan, including abolishing parking minimums. Sacramento also pledged to begin studies on parking maximums. These changes will still need to be codified in the city’s zoning code, which will likely be voted on later this year. The city’s shift is designed to reduce car trips, allow more efficient use of land, and provide the density and ridership necessary to support more transit services, which will reduce vehicle miles travelled (VMT) and GHG emissions. Sacramento also hopes that reducing parking in the city will create more space for pedestrian, bicycle, and transit infrastructure, which will help incentivize those modes of travel over single-occupancy vehicles. Public comments at the City Council meeting included some criticism of increasing density, but most comments were supportive of the city’s decision.

Also in January 2021, City of Berkeley officials voted to eliminate off-street parking requirements for new developments. The city determined that parking minimum requirements often thwart the construction of new housing. The city’s changes include exceptions for neighborhoods at risk for fire danger and streets that are narrower than 26 feet. The city also implemented parking maximums in transit-rich areas. Off-street residential parking cannot be offered at a rate of more than 0.5 spaces per unit for projects located within 0.25 miles of a high-quality transit corridor.

In 2018, San Francisco passed an ordinance that eliminated parking minimums citywide, for all uses. Parking is no longer required for any new developments anywhere in San Francisco. Most use types are also prohibited from providing more than 0.5–1.5 spaces, depending on the zoning of the district.

Critics of the elimination of parking minimums are concerned about areas that lack public transit options. This concern is one of the reasons that some cities have not eliminated minimums. In Los Angeles, for example, the public transit system lacks service in many areas and provides much longer travel times than single-occupancy vehicles. Parking minimums in the city require most apartments to provide one or two parking spots per unit and commercial properties are required to have one space for every 100 to 200 square feet, which often amounts to more space for parking than the business itself. Los Angeles’ lack of public transit and sprawling landscape, however, make it more difficult for the city to implement city-wide changes to its parking requirements.

The current housing crisis is another reason some cities are revisiting their parking policies. The elimination of parking minimums for new developments can promote construction of affordable housing. Parking minimums are costly for developers and limit design options. Parking also takes up a substantial amount of space, which reduces the number of housing units that can be built for a given project. Fewer parking spaces could mean more units built per project, with more of those units being designated as affordable. Urban landscapes in California may become more affordable and less polluted as these trends continue to unfold throughout the state.

Supreme Court of the U.S. Holds that Draft Biological Opinions that are Pre-decisional and Deliberative Are Protected from Disclosure Under FOIA By the Deliberative Process Privilege

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On March 4, 2021, the Supreme Court of the United States in United States Fish and Wildlife Service v. Sierra Club, Inc. (2021) 141 S.Ct. 777, in an opinion written by newly appointed Justice Barrett and joined by Justices Roberts, Thomas, Alito, Kagan, Gorsuch, and Kavanaugh, reversed in part the Ninth Circuit Court of Appeals’ decision in holding that the deliberative process privilege protects Draft Biological Opinions (B.O.s) from disclosure under the Freedom of Information Act (FOIA) if the Draft B.O.s are pre-decisional and deliberative, even if they represent an agency’s last views on a proposed action.

BACKGROUND

In 2011, the U.S. Environmental Protection Agency (EPA) proposed a rule on the design and operation of cooling water intake structures intended for use in industrial facilities, to make use of technology to minimize adverse environmental impacts. (See 79 Fe. Reg. 22174 (2001).) Even still, these cooling structures would kill a certain amount of fish and other aquatic species, some of which might be federally protected (threatened or endangered). Accordingly, under Section 7 of the Endangered Species Act (ESA), the EPA consulted with the U.S. Fish and Wildlife Service (USFWS) and the National Marine Fisheries Service (NMFS), both of which began preparation of Draft B.O.s in order to make their jeopardy determinations, i.e., whether or not the EPA’s proposal would jeopardize the continued existence of a protected species. Informal consultation with these agencies began in 2012 and formal consultation began in 2013. Multiple documents were exchanged between agencies during this time.

In November 2013, the EPA revised its proposed rule in response to consultation, and USFWS/NMFS tentatively agreed to provide the EPA with their Draft B.O.s by December 6th and Final documents by December 20th. Both Draft B.O.s concluded that the proposed rule likely would jeopardize protected species. Neither agency formally approved their Draft B.O. or presented them to the EPA by the deadline and, instead, both agencies concluded that more work needed to be done. As well, the EPA was still internally debating its rule, therefore all parties agreed to extend the period of consultation.

By March 2014, the EPA had revised its proposed rule again from the 2013 version, in a manner that allowed USFWS/NMFS to issue a joint no-jeopardy determination, after which the EPA issued its final rule that same day. Sierra Club made FOIA requests to USFWS/NMFS regarding their consultation on this rule, and both agencies invoked the deliberative process privilege for the Draft B.O.s of EPA’s 2013 proposed rule. Sierra Club sued in the Northern District of California, and won on this issue. The Ninth Circuit affirmed the trial court’s decision on this issue. The Supreme Court grant certiorari.

ANALYSIS

FOIA mandates the disclosure of documents held by federal agencies upon request unless one of nine exemptions apply. One such exemption is the deliberative process privilege, which protects documents from FOIA requests if they reflect an agency’s preliminary thinking about an issue, as opposed to its final opinion. The deliberative process privilege exists to encourage agency candor so as to improve decisionmaking and avoid the “chilling effect” that can occur when an agency believes its internal discussion may be made public. Pre-decisional, deliberative documents are exempt from disclosure under this privilege, whereas documents indicating final agency opinion must be disclosed. This does not mean, however, that the last document prepared by the agency is necessarily a final document.  As Justice Barrett put it, sometimes a document does not present a final opinion upon which an agency has settled and is only considered final at all because nothing else follows it, because the proposed action upon which it is based “dies on the vine.” Further, whether or not the agency producing the document treats it as final is a primary determining factor.

Here, the Sierra Club contended that the 2013 Draft B.O.s, with their jeopardy determinations, must be considered final under prior precedent because they forced the EPA to change its rule in response. According to Justice Barrett, however,  the precedent cited by Sierra Club was inapposite and the Draft B.O.s prepared in response to the EPA’s 2013 proposed rule were simply draft documents that “died on the vine” when the EPA changed its rule in 2014, and did not represent final agency opinions. She reasoned that, because the 2013 Draft B.O.s were not made available to the EPA, they were still “subject to change.” Even if they had been made available to the EPA, existing regulations would still allow them to be revised. Justice Barrett further found that the gap in time between due dates for the 2013 Draft B.O.s and their Final counterparts indicated their deliberative nature, for why would there be a two-week gap between draft and final unless revisions were anticipated? Mostly though, the court relied on the fact that neither the USFWS nor NMFS had finalized their 2013 Draft B.O.s—they were unapproved by agency decisionmakers and not forwarded to the EPA—as evidence showing that the agencies did not view them as final and thereby proving their lack of finality. These documents then were not really Draft B.O.s but instead were “drafts of draft[s].” They may have contained the last words on the 2013 proposed rule but were not intended to be final.

DISSENT

Justice Breyer penned a dissent, joined by Justice Sotomayor, in which he questioned the majority’s position that the documents were “drafts of drafts,” and asserted that Draft B.O.s do not normally “enjoy” the deliberative process privilege. The dissent preferred a more in-depth factual analysis to determine finality of the documents, and would have liked the question remanded to allow the Ninth Circuit to determine exactly how much more work needed to be done on the draft documents to establish whether they were closer to draft or final documents. Justice Breyer also noted the long agency history of disclosing Draft B.O.s to the public.

– Casey Shorrock

First District Holds that Deficiencies in Notice Did Not Excuse CEQA Litigants from Exhausting Available Administrative Remedies

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The First District Court of Appeal in Schmid v. City and County of San Francisco (Feb. 1, 2021) 60 Cal.App.5th 470, held that Appellants’ CEQA claims were barred by their failure to exhaust available administrative remedies, even where deficiencies in the notice excused the litigants from satisfying the exhaustion requirements under Public Resources Code section 21177.

BACKGROUND

The “Early Days” statue, located in San Francisco’s Civic Center, is part of the “Pioneer Monument”—a series of five bronze sculptures memorializing the pioneer era when California was founded. The statue depicts three figures, including a reclining Native American over whom bends a Catholic priest. Public criticism has surrounded the statue since its installation in 1894.  

In 2018, after charges of the statue’s racial insensitivity resurfaced, the San Francisco Arts Commission and the San Francisco Historic Preservation Commission (HPC) granted a Certificate of Appropriateness (COA) to remove the statue and place it in storage. In granting that approval, the HPC determined the removal of the statue was categorically exempt from CEQA. There were no issues raised at the HPC hearing about a perceived need for environmental review. Nor were there any appeals of HPC’s CEQA determination to the San Francisco Board of Supervisors. 

Appellants, two opponents of the statue’s removal, appealed the HPC’s adoption of the COA to the San Francisco Board of Appeals. The Board of Appeals initially voted to overturn the COA, but later had it reinstated. After the Board of Appeals approved the COA, the City immediately removed the statue the following morning. 

Appellants filed suit seeking to overturn the Board of Appeals’ order authorizing removal of the statue. They alleged violations of constitutional and statutory law, including CEQA. The trial court sustained a demurrer without leave to amend. On the CEQA claims, the trial court found Appellants failed to exhaust available administrative remedies. Appellants appealed.

COURT OF APPEAL’S DECISION

Exhaustion of Administrative Remedies
The Court of Appeal explained that CEQA litigants must comply with two exhaustion requirements. First, Public Resources Code section 21177 requires that a would-be CEQA petitioner must object during the administrative process and that all allegations raised in the litigation must have been presented to the agency before the challenged decision is made. Second, a would-be CEQA petitioner must exhaust all remedies that are available at the administrative level, including any available administrative appeals. Under Public Resources Code section 21151, a CEQA determination made by a nonelected decision-making body of a local agency may be appealed to the agency’s elected decision-making body, if any. The CEQA Guidelines encourage local agencies to establish procedures for such appeals. As relevant here, the San Francisco Administrative Code requires that appeals of CEQA determinations must be made to the Board of Supervisors, as the body of elected officials responsible for making final CEQA determinations.

The Court of Appeal found Appellants failed to comply with both exhaustion requirements. They did not object to the HCP’s determination that the project was categorically exempt from CEQA during the administrative process and they did exhaust administrative appeals available under the San Francisco Administrative Code. Specifically, on the second point, although Appellants appealed the HPC’s decision to the Board of Appeals, they failed to exhaust available remedies because they did not separately appeal the HPC’s CEQA determination to the Board of Supervisors, as required under the City’s Code.

Appellants argued they were excused from both exhaustion requirements because the City failed to provide adequate notice. The court agreed with Appellants in part, finding that Appellants were not required to comply with the statutory exhaustion requirements in section 21177 because there was no notice in advance of the HPC meeting that a categorical exemption might be on the agenda. But, the court explained, the inadequate CEQA notice did not excuse Appellants from complying with the requirement in the City’s Code that CEQA determinations must be appealed to the Board of Supervisors. The court also noted that Appellants had notice of the HPC’s CEQA determination because they appealed it, improperly, to the Board of Appeals. Because Appellants failed to appeal the CEQA determination to the appropriate body, they forfeited their right to bring a CEQA action.

Futility Argument
Appellants also argued they should be excused from exhausting their administrative remedies because doing so would have been futile. Citing a Board of Supervisors resolution that was not in the record, Appellants argued that an appeal to the proper board would have been futile because the Board of Supervisors already adopted a definitive position that the statue should be taken down. The court rejected this argument, stating that even if the Board of Supervisors held this view as a policy matter, it still could have disagreed with the process of removal and opted for an EIR. In addition, the Court concluded that the Board of Supervisors was never presented with any arguments concerning the appropriateness of a categorical exemption, and thus any argument regarding how the Board of Supervisors would have responded was pure speculation.

– Veronika Morrison 

Sixth District Holds City’s Failure to Send Notice of Determination Did Not Excuse Plaintiff’s Failure to Name Indispensable Party Within Limitations Period

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The Sixth District Court of Appeal in Organizacion Comunidad de Alviso v. City of San Jose (Feb. 9, 2021) 60 Cal.App.5th 783, held that the City of San Jose’s failure to send a Notice of Determination to a member of the petitioner organization, in violation of Public Resources Code section 21167, subdivision (f), did not excuse the petitioner’s failure to name an indispensable party in a CEQA action before the statute of limitations expired.

BACKGROUND

A light industrial center project was planned for construction on a primarily fallow farmland site in San Jose. Mark Espinoza, a member of the petitioner organization, Organizacion Comunidad de Alviso, requested that the City’s environmental project manager place him on the list to receive the Notice of Determination (NOD) for the Project.
Later that month, Microsoft Corporation purchased land from the original owner and took over as the project applicant. The San Jose City Council initially approved the project and associated EIR at an October 2017 meeting. The meeting agenda incorrectly referenced the previous landowner instead of Microsoft. Microsoft was, however, correctly referred to as the project applicant at the hearing. A second meeting was held to reconsider the project approval and EIR in December 2017. The notice for that hearing correctly identified Microsoft as the property owner, but the resolution approving the project incorrectly referenced the previous owners.

The City filed two NODs for the project. The first NOD, which was sent to Espinoza, listed the wrong project applicant. The City later realized the mistake and issued a second NOD that correctly listed Microsoft as the applicant. The City did not send Espinoza the second NOD.

The petitioner filed a petition for writ of mandate within 30 days of the first NOD, alleging violations of CEQA and the Planning and Zoning Law. The petition named the previous property owners as real party in interest, based on the information in the first NOD. Two weeks after the 30-day statute of limitations for the CEQA cause of action expired, the previous owners’ attorney notified the petitioner’s counsel that Microsoft had acquired the property and was named as the applicant in the second NOD. A month after receiving this notice—and well after the 30-day limitations period had run—the petitioner filed an amended petition naming Microsoft as a real party in interest.

Microsoft and the City demurred to the CEQA action in the amended petition, arguing that it was time-barred because petitioner failed to name Microsoft as the real party in interest before the limitations period expired. The trial court determined that the initial petition was defective for failing to join Microsoft, and consequently dismissed the CEQA cause of action as untimely.

COURT OF APPEAL’S DECISION

Failure to Name Applicant in NOD as Real Party in Interest
Under Public Resources Code section 21167.6.5, subdivision (a), in addition to naming as a defendant the agency that approved the project, a petitioner must name as a real party in interest the “person or persons identified by the public agency” in the NOD. Here, the petitioner did not dispute that Microsoft was a necessary and indispensable party under CEQA because it was named as the applicant in the NOD. Instead, the petitioner argued that its failure to name Microsoft should be excused because the NOD sent by the City named the wrong party and the City did not resend the new NOD after the error was corrected. The court disagreed.

Although the court acknowledged the City violated Public Resources Code section 21167, subdivision (f), by failing to send the second, corrected NOD to Espinoza, it concluded that CEQA contains no relief for the City’s violation. The court ruled that the City’s violation could not excuse or cure the amended petition’s untimeliness because Public Resources Code section 21167, subdivision (f), itself provides that the “date upon which [the NOD] is mailed shall not affect” the statute of limitations. The court also cited the Supreme Court’s emphasis that potential CEQA litigants must pay close attention to NOD filings before initiating litigation.

Additionally, the court reasoned that the second NOD was properly filed with the county clerk, posted at the county clerk’s office, and made available for review by all potential litigants—thereby providing constructive notice of the correct parties to name in a potential action. The court further noted that petitioner had actual notice of Microsoft’s status as the applicant because it had participated in the public hearings at which Microsoft was identified and the public notice for the City’s re-approval hearing listed Microsoft as the owner.

Because the petitioner failed to name Microsoft within the 30-day statute of limitation period after the corrected NOD was filed, the court held that the trial court’s dismissal was appropriate.

Material Defect
The petitioner also argued that the 30-day statute of limitations was not triggered because the NOD was materially defective, and therefore, the 180-day limitations period should apply. The court easily rejected this argument because the petitioner did not claim that the second NOD was insufficient or incorrect. The petitioner only claimed that the posting of two contradictory NODs essentially amounted to an NOD defect. The court disagreed, determining that the second NOD contained all required information and was therefore not defective.

Relation-Back Doctrine
The court also disagreed with the petitioner’s argument that the relation back doctrine under Code of Civil Procedure section 474 should apply. The court determined the petitioner’s ignorance of Microsoft’s status as the project applicant was unreasonable because the second NOD was correct and provided constructive notice of Microsoft’s identity. Additionally, the petitioner had received actual notice of the second NOD from the former owners’ attorney and still proceeded to wait two months to file its amended petition—a delay, which the court pointed out, was longer than even the initial limitations period.

Estoppel
Finally, the court rejected the petitioner’s argument that the City and Microsoft should have been equitably estopped from asserting the statute of limitations defense. It concluded that even if the City’s failure to send Espinoza the second NOD was intentional, the petitioner’s reliance on that failure would be unreasonable. Again, the City’s timely filing of the second NOD with the county clerk’s office gave all potential litigants constructive notice of the correct parties to name in a CEQA action.

– Veronika Morrison

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