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Second District Court of Appeal Upholds Dismissal of CEQA Action as Untimely

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On April 2, 2020, the Court of Appeal for the Second Appellate District in Coalition for an Equitable Westlake/Macarthur Park v. City of Los Angeles (2020) 7 Cal.App.5th 368 affirmed the trial court’s decision sustaining a demurrer without leave to amend because the petitioner’s claims were barred by the famously short statute of limitations for actions brought under CEQA. (Pub. Resources Code, § 21000 et seq.)

On March 3, 2017, after holding a public hearing, the advisory agency for the City of Los Angeles approved a vesting tentative tract map for the Lake on Wilshire Project, a mixed-use project consisting of a hotel, a residential tower, and a multi-purpose center with a theater. Prior to approving the tentative map, the advisory agency adopted a mitigated negative declaration. The city filed a notice of determination (NOD) on March 15, 2017.

Subsequently, on October 12, 2017, the planning commission approved conditional use permits for the project—finding that no subsequent review was required. Two tenants of an existing building on the project site appealed the planning commission’s decision. The city council denied the appeals on January 31, 2018, and further adopted a resolution approving general plan amendments in connection with the project.

On March 2, 2018, the petitioner filed a petition for writ of mandamus challenging the approval of the MND as violating CEQA. The city and real parties in interest filed a demurrer. The trial court sustained the demurrer without leave to amend on the grounds that the petitioner’s claims were time-barred under CEQA for failure to seek relief within 30 days after the NOD was filed on March 15, 2017.

In holding that the petitioner’s suit was untimely, the court found that application of the statute of limitations bar to the petitioner’s challenge was straightforward. The petitioner did not bring the CEQA action until March 2, 2018, nearly a year after the city approved the tentative map and posted the NOD. The court explained that there were only two situations where the filing of a NOD would not trigger CEQA’s statute of limitations—if the NOD is invalid on its face because the information required by the CEQA Guidelines is missing or incorrect, or where the NOD is filed before a decision-making body has approved the project. The court found neither of those circumstances existed.

Rather, the petitioner had attacked the validity of the NOD based on the advisory agency’s authority to make CEQA finding, including that: (1) the planning commission (not the advisory agency) was responsible for initial project approval and CEQA review; (2) the advisory agency lacked authority under the municipal code to make CEQA findings; (3) the advisory agency’s CEQA decisions were not properly appealable to an elected body; and (4) the authority to approve the project was improperly bifurcated from the authority for CEQA approval. In rejecting this argument, the court, quoting the California Supreme Court’s decision in Stockton Citizens for Sensible Planning v. City of Stockton (2010) 48 Cal.4th 481, 499, stated that the petitioner ‘confuses the timeliness of a lawsuit with its merits.’” To the extent a petitioner wished to challenge the advisory agency’s authority to make the initial project approval or adopt the MND, the court held that those arguments needed to be made within the applicable statute of limitations period. Because they were not, the petitioner was precluded from raising such arguments.

Second District Court of Appeal Upholds EIR for Refinery Project

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The Second District Court of Appeal upheld an Environmental Impact Report (“EIR”) for a South Coast Air Quality Management District (SCAQMD) permit for operational changes to two existing refinery facilities. (Communities for a Better Environment v. South Coast Air Quality Management Dist. (2020) 47 Cal.App.5th 588.) Praising both the lead agency and the EIR, the Second District Court of Appeal considered and rejected four arguments made by petitioner. One justice dissented on the issue of baseline.

Tesoro Refining and Marketing Company proposed the Los Angeles Refinery Integration and Compliance Project (“project”), which would integrate two of Tesoro’s oil refining facilities so that Tesoro could more flexibly alter outputs of gasoline and jet fuel, and reduce emissions in order to reduce air pollution and increase compliance. The SCAQMD was required to issue a permit, which allowed the facility to generate more heat, for the project. The court described three key points about the permit: (i) it was a paper change only and did not allow for any physical changes to the heater or other hardware; (ii) it imposed new limitations on emissions; and (iii) it allowed the facility to either process a heavier blend of crude or increase throughput by 6,000 barrels per day, but not both. The project would also shut down a catalytic cracking unit, a major source of emissions.

The SCAQMD prepared and certified an EIR which determined that the project would reduce emissions by 36 percent. The court explained that the analysis of emissions was conservative, in part because the EIR assumed the heater had never operated above 252 million BTUs per hour, when in fact it had. The project also imposed limitations on emissions that did not exist before the project. Although, the project could increase throughput or weight of the crude blend, the facility could have no new emissions under the new permit.

The court cited the following facts as pertinent—the draft EIR included over 1,700 pages; the SCAQMD circulated the EIR for 49 days more than required, for a total of 94 days; the final EIR responded to 1,112 pages of comments with 5,700 pages of responses; the United States Environmental Protection Agency (“EPA”) reviewed the EIR and indicated it had no objection to issuing the permit; and the EIR was “many thousands of pages” with the index alone being 180 pages.

Communities for a Better Environment (“CBE”) challenged the project alleging the EIR was inadequate. The trial court rejected CBE’s arguments and upheld the EIR. On appeal, CBE made four arguments.

Baseline

The court rejected CBE’s argument that the baseline was insufficient under CEQA. The EIR relied on a near-peak 98% baseline, based on an average of the refinery’s worst air pollution emissions during the two years leading up to the project, excluding the top two percent of the data in order to leave out extreme outliers. The EIR compared this 98th percentile analysis with impacts from the project and determined the project would reduce air pollution. CBE argued that CEQA requires an average-value baseline, but the court disagreed. The court emphasized that both peak and average can measure actual situations that truly exist, and there is no one “normal” way to measure the baseline. The court concluded that it was rational, and not “sinister or wrong,” to care most about the worst effects of air pollution, which occur when emissions hit their highest levels. Because EPA relies on a similar approach to regulate air pollution at the federal level, the court concluded the use of the 98th percentile baseline was supported by substantial evidence. One justice, however, dissented because federal custom and practice, which “appear[] to be the only substantial evidence found by the majority,” are not enough to support use of the 98th percentile as the baseline.

Pre-Project Crude Oil Composition

The court also rejected CBE’s argument that the EIR was required to provide the information regarding the existing composition of crude oil at the facility. The EIR explained that in order for the refinery to process a different blend of crude oil, the entire system would need to be changed. The EIR clarified that the project would not make these changes, so the court agreed there was no need to include information regarding the composition of crude oil. The project included a fixed crude operating envelope that would be the same before and after the project, and therefore the court agreed that baseline crude oil data was not necessary.

Failure to Exhaust

CBE argued that the SCAQMD was required to explain how it calculated the amount of additional oil that could be processed with the project. But, the court concluded, neither CBE nor anyone else had raised that exact issue before the SCAQMD, and therefore the issue could not be raised on appeal. The court emphasized that “[m]aking ‘broad’ requests that ‘encompass’ an issue raised on appeal is not raising the ‘exact issue’ during the administrative process.”

Existing Volume of Crude and Refinery’s Unused Capacity

Finally, the court concluded the EIR was not required to disclose the existing volume of crude or the refinery’s unused capacity because this data was immaterial to evaluating the project’s air pollution impact. The EIR explained that in order to increase the crude oil processing rate, the facility would need bigger pipes and stronger pumps. Because the project would not make these changes, it would not increase the refinery’s overall throughput. Data about the existing volume of crude processed and the refinery’s unused capacity, therefore, was not necessary.

Fourth District Reverses Dismissal, Holds Streets and Highway Code Does Not Exempt Caltrans Project from CEQA Review, and Petition Adequately Pled Equitable Estoppel

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In Citizens for a Responsible Caltrans Decision v. Department of Transportation (2020) 46 Cal.App.5th 1103, the Fourth District Court of Appeal overturned the San Diego County Superior Court’s judgment sustaining the California Department of Transportation’s (Caltrans) demurrer and dismissal of Citizens for a Responsible Caltrans Decision’s (CRCD) petition for writ of mandate. The petition claimed Caltrans improperly exempted a highway interchange project from CEQA review and engaged in misconduct that precluded Petitioner from timely filing the action. The Court of Appeal found that Streets and Highway Code section 103 did not exempt the project from CEQA review, and the petition sufficiently plead facts about Caltrans’ misrepresentation of the review process to establish a factual dispute about whether Caltrans was equitably estopped from asserting the 35-day statute of limitations defense.

Background

In 2005, Caltrans filed a notice of preparation (NOP) for an EIR analyzing construction of two freeway interchange ramps that would connect the I-5 and SR 56 highways in San Diego (the I-5/SR56 Project). The I-5/SR56 Project was part of the larger North Coastal Corridor (NCC) project — a multi-project effort proposed by Caltrans and the San Diego Association of Governments (SANDAG) to improve transportation in the La Jolla and Oceanside area.

Streets and Highway Code section 103 went into effect in January 2012. The section provides the California Coastal Commission with integrated regulatory review of a “public works plan” (PWP) for NCC projects, rather than traditional project-by-project review and approval. Four months later, Caltrans circulated a Draft EIR for the I-5/SR56 Project. The Draft EIR explained that “following circulation of the FEIR, if the decision is made to approve the Project, a Notice of Determination (NOD) will be published for compliance with CEQA and a Record of Decision will be published for compliance with the National Environmental Policy Act (NEPA).”

In October 2013, Caltrans issued an FEIR for a separate NCC highway-widening project. The report explained that section 103 did not eliminate project-specific CEQA or NEPA review—rather, it provided the Coastal Commission with streamlined review. In 2014, Caltrans and SANDAG issued, and the Coastal Commission approved, the PWP for the 40-year NCC project. The PWP explained that it did not supplant CEQA, NEPA, or other regulatory review schemes for individual projects proposed under the NCC.

In June 2017, Caltrans released a Final EIR for the I-5/SR56 Project. The report reiterated that, if it approves the Project, the agency will publish a NOD to comply with CEQA and a Record of Decision to comply with NEPA. However, in contradiction to the language above, the Final EIR also added that the passage of section 103, together with Public Resources Code section 21080.5, “mandate that instead of being analyzed under CEQA, the [NCC Project] and all of the projects included therein, shall be addressed under the CCC’s review per its certified regulatory program.” The FEIR reasoned that because the I-5/SR56 Project was identified in the PWP, and the Coastal Commission approved it in 2013, CEQA review was no longer required.

Though Caltrans concluded CEQA no longer applied to the I-5/SR56 Project, it maintained that public disclosure of the Project’s impacts was “still desirable.” Therefore, it released the Final EIR to satisfy CEQA’s analytical and disclosure requirements, and provided the public with a 30-day review and comment period from July 14, 2017 to August 14, 2017. However, before this period commenced, Caltrans approved a “project report” for the I-5/SR56 Project on June 30, 2017, and filed a Notice of Exemption (NOE) on July 12, 2017. The NOE concluded that the Project was exempt from CEQA and its impacts were analyzed pursuant to the Coastal Commission’s certified regulatory program.

CRCD’s counsel first became aware of the NOE on September 28, 2017. After Caltrans refused CRCD’s request to rescind the NOE or agree to a 180-day statute of limitations, CRCD filed a petition for writ of mandate and declaratory relief 35 days later on November 1, 2017. Caltrans filed a demurrer to the petition and the trial court sustained it without leave to amend. The trial court entered a judgment dismissing the petition with prejudice. CRCD appealed.

The Court of Appeal’s Decision

The Fourth District reviewed the trial court’s decision denying CRCD leave to amend and sustaining Caltrans’ demurrer de novo, and considered: (1) whether Streets and Highway Code section 103 exempts the I-5/SR56 Project from CEQA review; and (2) whether CRCD’s petition sufficiently alleged facts showing Caltrans was equitably estopped from raising the 35-day statute of limitations. The Court treated Caltrans’ demurrer as having admitted all of the properly pled material facts in the petition. The Court stated that a demurrer brought on statute of limitations grounds will be overruled if the relevant facts do not clearly establish that the action is time-barred.

Section 103 Does Not Exempt Caltrans from Conducting CEQA Review of the I-5/SR56 Project

First, the Court applied traditional rules of statutory construction to interpret section 103 as a matter of first impression. The Court held that the section did not statutorily exempt Caltrans from conducting CEQA review of the I-5/SR56 Project because it only exempted the Coastal Commission’s approval of the PWP. The Court reasoned that the Legislature intended the PWP to function as a “long range development plan” that could be approved under a certified regulatory program, pursuant to Public Resources Code sections 21080.09 and 21080.5. This certified regulatory program only provided the Coastal Commission with approval authority. Further, section 103 only authorizes the Coastal Commission to prepare substitute documents when certifying or approving the PWP; it did not exempt Caltrans from conducting project-level CEQA review and preparing an EIR for the I-5/SR56 Project.

Finally, the Court rejected Caltrans’ argument that the Coastal Commission’s approval of the PWP implicitly approved the I-5/SR56 Project. The Court explained that the PWP included numerous alternative projects for the NCC, but did not include the I-5/SR56 Project, as defined in the Final EIR. Had the Legislature intended to exempt Caltrans from preparing an EIR for the Project, or provide Caltrans with a certified regulatory program, it would have expressly done so. Because the plain language of section 103 does not provide for such exemptions, Caltrans was required to conduct individual, project-level CEQA review of the Project.

Petitioner Alleged Sufficient Facts Showing Caltrans Was Equitably Estopped from Relying on the Statute of Limitations Defense to Overcome Caltrans’ Demurrer

The Court’s independent review of the petition indicated that CRCD pled facts that sufficiently showed Caltrans was equitably estopped from relying on the 35-day statute of limitations for actions challenging notices of exemptions. A government agency may be estopped from asserting a statute of limitations defense if the petition indicates that the agency’s fraudulent or misrepresentative conduct prevented a reasonably prudent person from timely seeking legal advice or commencing litigation. Here, Caltrans informed the public in its Draft and Final EIRs that Caltrans would file a NOD if it decided to approve the I-5/SR56 Project. However, Caltrans did not inform the public, commenters, or interested parties about its decision to file a NOE instead of a NOD. Caltrans’ statements and conduct further suggested that it would not approve the Project until mid-August 2017, after the public comment and review period closed. The Court held that there was, at minimum, a disputed question of fact whether, by approving the Project in early July after repeatedly stating that project approval would follow the announced Final EIR circulation and review period, Caltrans misled CRCD about facts Caltrans intended to be acted on. CRCD’s petition adequately pled that CRCD was ignorant of the true state of facts, which precluded CRCD from commencing the instant action before the 35-day statute of limitations period expired.

For these reasons, the Court held that Caltrans’ demurrer must be overruled and the trial court’s judgment dismissing CRCD’s petition must be reversed and vacated.

Bridget K. McDonald

Second District Court of Appeal Upholds Ruling that Mitigation Measures are Inadequate and EIR is Required for Mixed-Use Development Project in Agoura Hills

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On February 24, 2020, the Second Appellate District in Save the Agoura Cornell Knoll et al. v. City of Agoura Hills et al. (2020) 46 Cal.App.5th 665 affirmed the trial court’s decision to require an EIR instead of an MND for a mixed-use development on 8.2 acres because the adopted mitigation measures deferred action, lacked performance criteria, and/or were otherwise inadequate.

Background

The “Cornerstone Mixed-Use Project,” proposed by Agoura and Cornell Roads, LP, and Doron Gelfand (“Appellants”), consists of 8.2 acres of development, including 35 residential apartment units, retail, a restaurant, and office space on an undeveloped hillside in the City of Agoura Hills. The project site is covered mostly by the Agoura Village Specific Plan (adopted in 2008 after its final EIR was certified) with a small portion located within a Significant Ecological Area. After Appellants submitted applications for a development permit, conditional use permit, oak tree permit, and tentative parcel map, the City prepared and finalized an MND for the project in November 2016. The Planning Commission voted to approve the project and adopt the MND. The local chapter of the California Native Plant Society (CNPS) appealed the Planning Commission’s decision, but the City Council approved the project and adopted the MND. The City Council found “no substantial evidence that the project would have a significant effect on the environment” because the project included feasible mitigation measures, reducing all effects to less than significant.

Save the Agoura Cornell Knoll filed a petition for writ of mandate followed by a first amended petition on August 10, 2017, adding CNPS as a petitioner (“Petitioners”), alleging multiple CEQA violations, a violation of planning and zoning law, and a violation of the City’s oak tree ordinance. The trial court granted the petition as to the CEQA and oak tree ordinance claims, denied the planning and zoning law claim, and issued a peremptory writ of mandate directing the City to set aside its project and permit approvals, and to set aside the MND to make way for preparation of an EIR. The project applicants appealed.

The Court of Appeal’s CEQA Decision

The Court reviewed Appellants’ claims under the “fair argument” standard, which requires finding that a lead agency abused their discretion if substantial evidence in the record supports a fair argument that that the project may have a significant effect on the environment. This standard creates a relatively low threshold for requiring an EIR pursuant to “‘legislative preference for resolving doubts in favor of environmental review.’” Three CEQA resource areas were litigated—cultural, biological, and aesthetic. Appellants asserted, repeatedly, that mitigation was adequate and an EIR was not required, and the Court repeatedly disagreed. Overall, the Court found that certain mitigation measures set forth in the MND were “not feasible,” “improperly defer[] mitigation,” or were “inadequate to mitigate the project’s potentially significant impacts.” Affected resource areas are briefly discussed below.

Cultural Resources

The project site contains an identified prehistoric archaeological site that was previously determined to be eligible for inclusion in the California Register of Historical Resources. Three mitigation measures were included in the MND to address potential impacts to the site: (1) construction monitoring, notification of finds, and preservation in place of any resources (i.e., avoidance); (2) notification if human remains are encountered; and (3) a data-recovery excavation program if the site cannot be avoided. The Court found this mitigation constituted improper deferral because, pursuant to an expert opinion on the record, the site could not be avoided as prescribed in the first measure without a project redesign and therefore the third measure would be necessary. The Court also found that the third measure delayed “formulation of several components of the data recovery plan until some future time.” For example, the third measure called for the preparation of a Mitigation Monitoring and Reporting Plan (MMRP), yet did not explain how this MMRP would actually mitigate impacts, and there was no evidence in the record that inclusion of such information was impractical or infeasible prior to project approval. Appellants challenged the “evidentiary value” of the expert opinion, but the Court noted that any “conflict in the evidence” should be resolved in an EIR and that there was no debate as to whether the project would have a significant effect on a cultural resource, just on how it might be mitigated.

Biological Resources

The project site contains three special-status plant species that could be significantly impacted by project grading, landscaping, and fuel modification activities: Agoura Hills Dudley, Lyon’s pentachaeta, and Ojai navarretia. Again, three mitigation measures were included in the MND to reduce impact significance: (1) avoidance if feasible for two of the species, but if not, preparation of a restoration plan that includes plant surveys, onsite restoration, and offsite preservation; (2) the same measure for the third species; and (3) locating and flagging of all three species within the fuel modification zone and the use of buffers, other protocols, and monitoring for protection. The Court found the first two measures inadequately mitigated impacts and were infeasible, largely because of statements on the record asserting that restoration of “‘rare plants is next to impossible’” and “‘experimental’” and because the City relied on outdated surveys conducted during the drought in adopting the measure. The measures called for updated surveys but the record provided no evidence as to why such surveys could not be conducted prior to project approval. The measures also failed to provide performance criteria for determining the feasibility of avoidance or in the alternative, maintenance plans. The third measure was found to be inadequate because it did not properly consider the full expanse of fuel modification zones nor did it account for ongoing fuel modification activities, as it applied only to construction.

The project site also contains native oak trees, 35 of which would be removed by the project. Two mitigation measures were included in the MND to reduce significant impacts: (1) replacement of oak trees either onsite or via in-lieu fees paid to the City to acquire land for new tress; and (2) submittal of an oak tree survey, report, and preservation program to the City for approval. The Court found the first measure to be inadequate because mass grading required for the project would cause a loss of subsurface water to any onsite replacement trees, which could result in failure; yet this water deficit was not addressed in the measure. Also, substantial evidence existed showing that oak woodlands are “‘impossible to recreate’” or at least “‘often unsuccessful.’” Lastly this measure was inadequate because the in-lieu fees to be paid to the City would not be not part of a program that has undergone its own CEQA review, which is required “‘to provide a lawful substitute for the “traditional” method of mitigating CEQA impacts.’” The second mitigation measure was found to potentially lack effectiveness because that same subsurface water deficit was not considered, thereby calling into question any claims of long-term survival of preserved oak trees.

Aesthetic Resources

The project site contains a “distinct” knoll of oak trees that likely would be removed for project development. The MND acknowledged the potential loss of this scenic resource but claimed mitigation reduced the impact to less than significant. This mitigation included some avoidance measures and also pointed to the oak tree measures (discussed above) for restoration and preservation. The trial court found this mitigation to be inadequate. Although Appellants claimed the Petitioners failed to properly exhaust this issue (discussed below), the Court found that evidence in the record demonstrated that the knoll may not be preserved under project design and that, even if it were, the subsurface water deficit would jeopardize its continued existence, and no in-lieu fee could “reduce the impacts on aesthetic resources” of this loss.

The Court of Appeal’s Decision on Appellants’ Other Claims

Administrative Remedies Were Exhausted

Appellants repeatedly contended that Petitioners did not exhaust their administrative remedies and therefore forfeited their claims. They also contended that Petitioners did not address the issue of exhaustion in their first opening brief, and therefore could not submit supporting evidence. Addressing the second claim first, the Court found that Petitioners did preserve the general issue of exhaustion because there is no requirement that the issue must be argued in an opening brief and, nevertheless, their opening brief cited evidence that was later used in Petitioners’ reply brief to show exhaustion. This evidence demonstrated that exhaustion was “not a new legal theory raised for the first time” on reply. The Court also found that Petitioners expressly alleged exhaustion in their petition and “lodged the complete administrative record” as part of the writ proceedings. Further, the trial court’s rejection of Appellants’ supplemental brief on this issue was warranted because in filing it they had directly violated a court order stating that “the issue of exhaustion was thoroughly argued.”
As to the first contention, appellants raised exhaustion as a defense to each of Petitioners’ CEQA claims. The Court considered “the totality of [the] record” by looking to various portions demonstrating that most of Petitioners’ claims were preserved. It looked specifically to public comments, City Council hearing transcripts, other correspondence from environmental groups and experts, and documentation from the City’s own consultants to find again and again that the City was “‘fairly apprised’” of the “underlying concerns behind Petitioners’’ claims and thereby had the “‘opportunity to decide matters [], respond to objections, and correct any errors before the courts intervene.’”

Court Rejected Standing and Statute of Limitations Defenses

Appellants asserted both that Petitioner Save the Agoura Cornell Knoll lacked standing because Petitioners failed to show that they timely objected to project approval and that Petitioner CNPS was barred from the action because they joined the suit after the statute of limitations had run. The Court declined to consider the merits of either claim. It found that Appellants had forfeited their statute of limitations argument by not properly asserting it “‘in a general demurrer or pleaded in answer’” and, therefore, without a statute of limitation violation, CNPS remained a petitioner with uncontested standing. The Court was quick to point out that Appellants claims on these points were made for the first time in their appellate reply brief “[n]otwithstanding their [own] arguments on forfeiture.”

Attorney’s Fees Are Recoverable and Appellants Are Jointly and Severally Liable

The trial court awarded attorneys’ fees to Petitioners and assigned joint and several liability to both the developer Agoura and Cornell Road and its representative Doron Gelfand. Appellants first argued against the award by asserting that Petitioners did not provide notice of the CEQA action to the Attorney General “in accordance with section 21167.7 [of the Public Resources Code] and Code of Civil Procedure section 388” that requires notice be served within 10 days of filing a pleading. On this point, the Court found that, although Petitioners did not serve the Attorney General notice of the first amended petition, they did properly notice their original petition, which was not materially different than the first amended, thereby giving the Attorney General “ample time to intervene.” The Court further pointed to case law emphasizing that a lack of strict compliance with the 10-day notice rule “was not an absolute bar to attorney’s fees.” It further concluded that a declaration from Petitioners’ attorney attesting to notice could stand as evidence in lieu of formal proofs of service of that notice. Appellants then argued that Gelfand could not be held personally liable because he was neither the applicant nor the property owner. But, in utilizing the test articulated in Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1181, the Court found that Gelfand was a “real party who pursued a direct interest in the project that gave rise to the CEQA action and actively participated in the litigation” and, therefore, was liable. The record contained ample evidence showing that Gelfand was, at one time, “‘the owner of the property’” and had personally made several requests to the City regarding the project, and was listed “as the sole project applicant” on City resolutions approving project entitlements.

Oak Tree Ordinance Was Violated

The City’s oak tree ordinance allows the cutting of oak trees with a permit but disallows removal of more than 10 percent of a subject property’s total estimated canopy or root structure. The project would result in removal of up to 36 percent of oak trees on site in violation of this ordinance. Appellants did not argue against that fact but did assert Petitioners failed to exhaust their administrative remedies on this claim. The Court addressed both the merits of the claim and exhaustion (see above) and agreed with the trial court in finding that, in approving the oak tree permit for the project, the City violated its own “‘duly adopted law’” and therefore the permit must be vacated.

Casey Shorrock

Second District Court of Appeal upholds trial court’s denial of attorney fees after the County granted applicant’s request to vacate permit approvals for a single-family home.

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In Canyon Crest Conservancy v. County of Los Angeles (2020) 46 Cal.App.5th 398, Division 4 of the Second District Court of Appeal affirmed the trial court’s denial of attorney fees following dismissal of an action challenging a negative declaration for a single-family home project on a vacant lot in Los Angeles County. After the petitioner successfully obtained an administrative stay, the applicant/Real Party in Interest, appearing in propria persona, requested that the County vacate his approvals because he could not afford to pay for the litigation. The Court of Appeal found that petitioner’s action did not enforce an important right affecting the public interest or confer a significant benefit on the general public.

Project Background

Real Party in Interest Stephen Kuhn, owned a roughly one-acre parcel on a steep hillside in Altadena, an unincorporated community in Los Angeles County. In 2014, Kuhn applied to the County for a minor use permit to build a single-family home on the hillside and an oak tree permit to remove one tree on site. In 2015, he presented the project to the Altadena Town Council, which recommended approval. The County planning department initially determined that the project was categorically exempt under Guidelines section 15303, but prepared an initial study to assess potential impacts, though not because the planning department believed there were “unusual circumstances.” The initial study found that the project was “at the edge of a disturbed woodland community” but, by complying with the County’s oak tree ordinance, the project would not have a significant impact. The County prepared a negative declaration in 2016.

After learning about the project, Kuhn’s neighbors sent a letter to the County objecting to the project, primarily because it would affect their views and because one neighbor would no longer be able to park cars on Kuhn’s property. The neighbors sent additional letters to the County objecting to the project’s potential impacts to the oak canopy, and hired an attorney who began objecting to the project for them, and then on behalf of the nonprofit they created. The neighbors also hired an arborist who opined that the single tree slated for removal on the project site actually belonged to the neighbors, and that the project would impact three additional trees. The County planning department held a hearing on the project at which the neighbors appeared and objected that it would lower the market value of their homes. Kuhn offered to redesign the home to reduce the impacts to trees, and his arborist defended the initial assessment of tree impacts. A County biologist opined that the permit conditions were adequate to address impacts to trees given the “highly disturbed” condition of the woodland. The County approved the project, and the neighbors appealed.

The County Planning Commission heard the neighbors’ appeal and, in upholding project approval, required Kuhn to replace any removed or deceased trees at a 2-1 ratio and to monitor the remaining trees for 7 years. The neighbors appealed to the Board of Supervisors (board), who held three hearings on the project and ultimately approved it. The neighbors filed a petition before the board’s final approval, but agreed to stay the action until the board approved the project.

Trial Court Proceedings

In May 2017, the trial court granted an administrative stay under Code of Civil Procedure section 1094.5, finding that the neighbors had shown a reasonable possibility of success on the merits of their claim that their expert’s opinion was substantial evidence supporting a fair argument that the project may have significant impact on the oak woodland, but cautioned that her finding was not determinative as to the merits of the writ petition itself.
In December 2017, Kuhn, who appeared in propria persona throughout the litigation and appeal, asked the County to vacate the approvals “to end the litigation.” County planning recommended vacating the approvals but stated they would keep Kuhn’s application on file, and noted that an EIR was not normally required for a single-family home on a vacant lot, and that none of the exceptions to the exemption were present. The board vacated the approvals after Kuhn stated he could not afford to continue to pay for the litigation. One supervisor stated her belief that the neighbors had abused the CEQA process.
In March 2018, after dismissing the action, the neighbors moved for attorney’s fees under Code of Civil Procedure section 1021.5 seeking $289,544.00. The County and Kuhn opposed the motion, and the trial court denied it, finding that the neighbors had failed to establish any of the required prongs under Code of Civil Procedure section 1021.5. The neighbors appealed.

The Court of Appeal Opinion

An appellate court considering a trial court’s order on attorney’s fees reviews it for abuse of discretion. Whether the statutory requirements have been met is left to the trial court’s sound discretion unless the issue turns on statutory construction, which is reviewed de novo. The burden of proof is on the party challenging the trial court’s order. Here, that party was Kuhn’s neighbors.
The neighbors argued for de novo review of whether their action enforced an important right or conveyed a significant benefit. The Court rejected their arguments, finding that the trial court was in a better position than the Court of Appeal to assess whether the neighbors had met the requirements.

Enforcement of an Important Right Affecting the Public Interest

The County and Kuhn argued that even though CEQA actions can involve important public rights, this one did not. The trial court agreed, noting that the neighbors did not obtain any additional environmental review, and that the grant of the stay was not a favorable ruling on the merits of their CEQA claim. On appeal, the neighbors challenged both of those determinations, but the Court of Appeal found both to be within the discretion of the trial court. The Court noted that the record indicated that the County believed it and Kuhn had acted properly, and there was no evidence it would require additional CEQA review should Kuhn renew his application. The neighbors argued that all they needed to do was bring a “viable CEQA claim” to show an important public right, but the Court stated they must vindicate the right through their litigation, which the trial court found the neighbors had not done.

Significant Benefit on the General Public

The neighbors argued that they had conferred a significant benefit by causing the County to reconsider the project under CEQA. The trial court rejected this argument because the administrative stay was not an adjudication of the merits and there was no evidence that the County would reconsider the CEQA review of the project. The neighbors submitted statements from area residents that they believed the County would treat their concerns about the project more seriously because of the lawsuit, but the trial court rejected these statements as speculative and unsubstantiated. The trial court also found that because of the small size of the project (a 1500-square-foot single-family home on one lot) the neighbors had not shown that their action conferred a benefit on the general public or a large class of persons. The Court of Appeal agreed, noting that the County kept Kuhn’s application on file and would allow him to revive the project if he wanted to, but made no indication that it would require additional CEQA review. The Court also noted that the neighbors had admitted that their concern was the effect of the project on their personal property and the use of Kuhn’s property as parking. Lastly, the Court rejected the neighbors’ argument that they had provided additional opportunities for public input, as Kuhn stopped pursuing the project.

Nathan O. George

City of San Diego Appropriately Relied on CEQA’s In-Fill Exemption in Approving Residential Development, Although Project Less Dense than Typically Required by the general plan, Fourth District Holds

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In Holden v. City of San Diego (2019) 43 Cal.App.5th 404, the Fourth District Court of Appeal upheld the City of San Diego’s reliance on CEQA’s in-fill exemption for a seven unit residential project on environmentally sensitive land in the city’s North Park community. The court rejected plaintiff’s claim that the city erred in relying on the in-fill exemption because the project was less dense than the standards established in the city’s general plan. The court held that substantial evidence supported the city’s reliance on the exemption because the general plan, together with an applicable community plan, allowed the city to deviate from the density standards for projects in environmentally sensitive areas.

Background

In 2014, the developer applied to the city to demolish two houses and to construct seven new residential condos on a 0.517-acre site located on a canyon hillside. City staff initially informed the developer that the project did not comply with the minimum density standards for the site under the general plan and an applicable community plan. Specifically, staff determined Policy LU-C.4 of the general plan and the housing element of the community plan required a minimum of 16 dwelling units on the site. Later, however, city staff concluded that a reduced density of seven units was appropriate because the site is considered environmentally sensitive.

The city determined that the project was categorically exempt from CEQA under the infill exemption set forth in CEQA Guidelines section 15332. To qualify for this exemption, a project must be consistent with the general plan’s designations and policies. On April 18, 2017, at the planning commission’s recommendation, the city council unanimously voted to approve the project.

The petitioner filed a petition for writ of mandate challenging the city’s determination that the project is exempt from CEQA and the city’s approval of the project. The trial court denied the petition. The petitioner appealed.

The Court of Appeal’s Opinion

On appeal, petitioner contended that the city erred in finding the project is exempt from CEQA under the infill exemption because the project provides less residential density than is required by the general plan. In so arguing, petitioner relied primarily on a policy of the general plan to “‘[e]nsure efficient use of remaining land available for residential development … by requiring that new development meet the density minimums of appliable plan designations.’” The general plan recommended that residential areas designated “Medium High”—including the project site—provide multi-family housing with a density range of 30- to 44-dwelling units per acre. Because the project did not meet this standard, petitioner argued the project was inconsistent with the general plan, and, therefore, the city abused its discretion in relying on CEQA’s in-fill exemption.

The court rejected the petitioner’s argument as too rigid of an interpretation of the general plan. The court explained that the city’s determination that the project is consistent with the general plan is entitled to great weight because the city is in the best position to interpret it. The general plan consistency requirement does not require rigid conformity to the general plan. A project is consistent with the general plan if it will further the plan’s objectives and policies, and not obstruct their attainment.

Although the general plan’s density standards would ordinarily require 16 or more units on the site, the city council adopted extensive findings explaining why the project was consistent with the general plan, despite its lower density. In support of its findings, the city council cited a note in the community plan, which states that the residential density recommendations “‘may be subject to modification.’” Further, the community plan provided that modifications could be made to the recommended densities. The general plan provides that the community plans are integral components of the general plan; thus, the court held, the city appropriately considered these statements in the community plan as part of the general plan. The city council found that the project, at seven units, struck a reasonable balance of meeting the city’s housing goals, while also respecting the environmentally sensitive canyons. The city’s code limits development on steep hillsides, and the project proposed design was consistent with the city’s hillside development standards. Further, the project would provide infill residential housing, consistent with the city’s housing policies. As stated by the city council, the project’s “‘creation of seven new dwellings, where there existed two units, would assist the housing needs of the North Park area community.’”

The Court of Appeal concluded that the city’s extensive general plan consistency findings demonstrated that the city considered the general plan, the community plan, and the city’s steep hillside development regulations in approving the project and balanced the competing interest of those plans and regulations. Based on its review of the record, the court concluded that the city acted reasonably and did not abuse its discretion by balancing those competing policies and regulations to determine the project is consistent with the general plan. Accordingly, the court held that substantial evidence supported the city’s reliance on the in-fill exemption.

 

Laura Harris

Fifth District Holds Kern County’s Ordinance for Streamlining Oil and Gas Well Permits Must Be Set Aside Due to Multiple CEQA Violations, Including Deferred Formulation of Mitigation Measures and Failure to Use Proper Threshold of Significance for Analyzing Noise Impacts

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In King and Gardiner Farms, LLC v. County of Kern et al. (2020) 45 Cal.App.5th 814, the Fifth District Court of Appeal held that the County of Kern must rescind its approval of a gas and oil ordinance that would streamline the County’s permitting process for new oil and gas wells. In the published portions of the decision, the court held: (1) the mitigation measures for the ordinance’s significant impacts to water supplies impermissibly deferred formulation of the measures or delayed the actual implementation of the measures and the EIR’s discussion of the effectiveness of the mitigation measures was inadequate; (2) the County’s finding that the ordinance’s conversion of agricultural land would be mitigated to a less-than-significant level was not supported by substantial evidence because, among other things, the mitigation measures allowed for conservation easements, which do not constitute actual mitigation; (3) the County inappropriately applied a single threshold for determining the significance of the project’s noise impacts; and (4) the County must rescind the ordinance and not re-approve the ordinance until the County has complied with CEQA.

Background

In November 2015, the Kern County Board of Supervisors approved an ordinance to streamline the permitting process for new oil and gas wells and certified an EIR for the ordinance. Because some of the impacts of the ordinance would be significant and unavoidable, the Board of Supervisors adopted a statement of overriding considerations, finding that the ordinance’s benefits outweighed its significant environmental impacts.

A private farm (KG Farms) and a group of environmental organizations, including Sierra Club, filed petitions for writ of mandate alleging that the County violated CEQA and the State Planning and Zoning Law in approving the ordinance. The trial court held that the EIR violated CEQA regarding impacts on rangelands and from paving as an air pollutants mitigation measure. The petitioners appealed, arguing that the County violated CEQA in additional respects. The Court of Appeal agreed with the petitioners.

Water Supply Mitigation Measures

The County’s EIR concluded that the ordinance would have a significant and unavoidable impact on water supplies because implementation of the ordinance would deplete the County’s municipal and industrial water supplies. To mitigate this impact, the EIR proposed several mitigation measures. One measure provided that, to the extent feasible, applicants for permits under the ordinance shall increase or maximize the re-use of produced water. Produced water is groundwater that naturally occurs in oil and gas reservoirs brought to the surface with the extracted oil and gas and separated from the hydrocarbons after extraction. The Court of Appeal held that the requirement for applicants to increase or maximize their use of produced water violated CEQA because it merely set forth a generalized goal, rather than establishing specific performance standards that must be met. The court opined that were it to hold such a measure satisfied CEQA, lead agencies and project proponents—aware of the court’s precedent—would have scant incentive to define mitigation measures for other projects in specific terms. Instead, planning documents or ordinances adopted by local governments could merely state that permit applicants must reduce environmental impacts to the extent feasible. Allowing such an approach, the court reasoned, would undermine CEQA purpose of “systematically identifying” feasible mitigation measures that will reduce environmental impacts. (See Pub. Resources Code, § 21002.)

Another provision of the County’s water supply mitigation required that the five biggest oil industry users of municipal and industrial water work together to develop and implement a plan identifying new measures to reduce municipal and industrial water use by 2020. The court held that this mitigation measure—which unquestionably deferred formulation of mitigation—violated CEQA because it lacked specific performance standards to include in the plan. Moreover, the measure did not commit the County to the measures ultimately included in the plan. Further, it assigned the duty to implement the measure to unidentified third parties who might not agree to participate in the task or who might not act in good faith. Yet another flaw with this mitigation measure was that the plan was not required to be developed until 2020, whereas the ordinance took effect in 2015. Thus, the measure allowed permits for oil and gas activities to be issued without being subject to the measures contained in the plan. Accordingly, the measure violated the CEQA principle against delayed implementation of mitigation measures.

Another mitigation measure adopted by the County specified that “[i]n the County’s required participation for the formulation of a Groundwater Sustainability Agency [pursuant to the Sustainable Groundwater Management Act (Senate Bill 1281)], the Applicant shall work with the County to integrate into the Groundwater Sustainability Plan for the Tulare Lake-Kern Basin, best practices from the oil and gas industry to encourage the re-use of produced water from oil and gas activities.” The mitigation measure set a re-use “goal” of 30,000 acre-feet per year. The Court of Appeal held that this mitigation measure violated CEQA because the groundwater sustainability plan mentioned in the measure must be adopted by January 31, 2020—four years after the ordinance was approved.  Therefore, the measure was improperly deferred. Furthermore, the goal of re-using 30,000 acre-feet per year of produced water was merely a goal, and not an enforceable commitment, as required by CEQA.

The Court of Appeal further held that because the water supply mitigation measures were of unknown effectiveness, in order for the County to properly adopt a statement of overriding considerations under CEQA, the EIR must “(1) describe the mitigation measures that are available (i.e., currently feasible) and (2) identify and explain the uncertainty in the effectiveness of those measures.” The court reasoned that such a requirement is mandated by the general rule that an EIR must alert the public and decisionmakers of the significant problems a project would create and must discuss currently feasible mitigation measures.

Agricultural Mitigation

The County’s EIR found that, without mitigation, the project has the potential to convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance to non-agricultural use because the ordinance would allow oil and gas activities, including new wells, to be located on agricultural lands. The EIR concluded, however, that, with mitigation, this impact would be reduced to less than significant. The mitigation measure adopted by the County for this impact allowed permit applicants to comply by adopting one or more of four options (a through d). The court held that because not all of the options constituted adequate mitigation under CEQA, the County lacked substantial evidence to support its conclusion that the ordinance would have a less-than-significant impact on agriculture.

In particular, option “a” of the agricultural mitigation measure authorized the use of agricultural conservation easements at a 1:1 ratio (one acre of agricultural land conserved for every one acre converted to non-agricultural uses). The court held that conservation easements do not constitute adequate mitigation because they do not create new agricultural land to replace the agricultural land being converted to other uses. Rather, conservation easements simply prevent the future conversion of the agricultural land. In other words, conservation easements do not actually offset a project’s impacts on agriculture. Accordingly, the inclusion of option “a” in the agricultural mitigation measure rendered the mitigation measure ineffective.

Option “b” of the agricultural mitigation measure allowed for the purchase of conservation credits from an established agricultural mitigation bank. The court agreed with the petitioners that there was no evidence in the administrative record that such banks existed. Thus, the record lacked substantial evidence to support a finding that this option would actually mitigate agricultural impacts. Therefore, it was not sufficient mitigation under CEQA.

The court also concluded that the County had failed to adequately respond to comments suggesting that the County adopt a mitigation measure requiring the clustering of wells so that fewer acres of agricultural lands would be converted under the ordinance. The County’s response to such comments noted that the County’s General Plan includes a policy requiring the clustering of wells, but the response did not specifically address the feasibility of adopting a mitigation measure requiring well clustering. Therefore, court concluded that the County’s responses to comments failed to comply with the requirements of section 15088, subdivision (b) of the CEQA Guidelines, which require a “reasoned analysis” in response to comments raising “significant environmental issues.”

Noise Thresholds of Significance

To determine whether implementation of the ordinance would cause significant noise impacts, the County used a quantitative threshold of 65 dBA DNL, meaning that the ordinance would not cause a significant noise impact if noise levels stayed below that threshold. The court held that the County’s use of a single threshold violated CEQA because the threshold did not measure the increase in noise levels over ambient levels. Comments on the EIR, as well as the County’s own noise report that was appended to the Draft EIR, suggested using an increase of 5 dBA to determine whether the increase in noise above ambient levels constituted a significant impact. For unexplained reasons, the County did not do so. Instead, the County argued that it was entitled to substantial deference in selecting the significance thresholds. Although the court agreed that the County is entitled to deference in its choice of significance thresholds, the court held that the County’s use of an absolute noise threshold for evaluating all ambient noise impacts violated CEQA because it did not provide a “complete picture” of the noise impacts that may result from implementation of the ordinance.

Remedy

The County requested the court to exercise its equitable powers, which include the power to order the status quo preserved, and allow the ordinance to remain in effect while the County corrects the deficiencies in the EIR and mitigation measures. The court declined to do so. The court reasoned that the usual remedy in a CEQA case is to order the respondent to rescind its approvals; the court saw no reason not to do so in this case. Unlike other cases that allowed an ordinance that benefited the environment to remain in place, the oil and gas permitting ordinance was not adopted for the benefit of the environment.

The court also directed that the new EIR prepared by the County should include updated baselines for the water supply and air quality analyses because conditions have changed since the County issued the notice of preparation (NOP) of the original draft EIR that warrant updating the baseline.

Fifth District Court of Appeal Upholds Air Pollution Control District As Proper Lead Agency, Finds Permit Requirements Provide Substantial Evidence For EIR Emissions Estimates, And Holds EIR Lacked “Reasoned Analysis” For Rejecting Additional Mitigation Measures

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In Covington v. Great Basin Unified Air Pollution Control District (2019) 43 Cal.App.5th 867, the Fifth District Court of Appeal affirmed in part the judgement of the trial court by holding that the District is the proper CEQA lead agency and that permit requirements provide substantial evidence to support the EIR’s fugitive emissions estimates for a proposed geothermal power project; and reversed in part by holding that the District’s feasibility assessment of a mitigation measure proposed by EIR commenters was flawed and required more “reasoned analysis.”

Background

In July 2014, the District certified the Casa Diablo IV Geothermal Development Project joint document EIR/EIS prepared for a proposed geothermal energy facility located on national forest land in Mono County. The project was proposed by Ormat Nevada, Inc., and Ormat Technologies, Inc. (“project proponents”) to be located adjacent to an existing geothermal power complex in an area that has been developed for geothermal activity since 1984. The joint document was prepared by the Bureau of Land Management, the U.S. Forest Service, and the District, with the state agency serving as the CEQA lead agency. The project was designed to reduce greenhouse gas emissions and dependence on fossil fuels by using heat extracted from water pumped from a deep geothermal reservoir to fuel a closed-loop system that would ultimately produce electricity. The reaction, however, would produce n-pentane (normal pentane)—a non-toxic reactive organic gas but a precursor to ozone—which would leak in some amount leak from the system and result in fugitive emissions. The EIR concluded that the amount of fugitive emissions would not exceed 410 pounds per day.

The Laborer’s International Union of North America Local Union No. 783 and certain individual members (“Petitioners”) filed a petition for writ of mandate against the District and project proponents as real parties in interest claiming that the EIR’s fugitive emissions conclusions were not supported by substantial evidence, that the District was an improper lead agency, and that the District erred in its feasibility analysis for measures to further mitigate fugitive emissions. The trial court denied the petition in full. Petitioners appealed.

District is Proper Lead Agency

Petitioners argued that Mono County, not the District, was the proper CEQA lead agency as defined in Guidelines section 15051, subdivision (b), because it was the agency with more “‘general governmental powers’” over the project. While the Court agreed that “‘normally’” a county would be the CEQA lead, as the first non-federal agency to act on the project, the District was qualified under Guidelines section 15052, subdivision (c), to act as lead.  As further evidence, the Court pointed out that, for a while, the District appeared to be the only involved state agency because of its unique permit authority over an otherwise federalized project. The Court further reasoned that the County’s involvement is minimal in comparison because the project requires “only” a conditional use permit from the County for a “small portion” of its pipeline, which gave it lesser responsibility for “approving the project as a whole,” thereby making the District the proper CEQA lead.

Permit Provides Substantial Evidence

Petitioners also argued that “the record does not contain substantial evidence to support the [EIR’s] conclusion that the Project’s n-pentane [fugitive] emissions will be limited to 410 pounds per day.” The EIR did not, in fact, include emissions calculations. But, the District countered that it provided total emissions numbers to Petitioner’s counsel under a public records act request prior to EIR certification. And, after EIR certification, it sent Petitioner’s counsel additional emissions data, albeit with some redactions. The District further argued that project compliance with permit requirements that limit daily fugitive emissions to 410 pounds per day provides substantial evidence to support the EIR’s conclusion that the project will not exceed that limitation. The Court agreed and cited to several cases for support, including Oakland Heritage Alliance v. City of Oakland (2011) 195 Cal.App.4th 884 and Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, where other courts held that “compliance with performance standards is a substitute for substantial evidence.” The Court also pointed out that the EIR contained several mitigation measures to lessen impacts from project fugitive emissions.

Mitigation Feasibility Assessment Lacks “Reasoned Analysis”

Petitioners then argued that additional feasible mitigation measures existed to further reduce fugitive emissions, provided by commenters on the Draft EIR, and that the District abused its discretion in finding them infeasible. The District countered  that the project’s required use of “‘best available technology’” and “‘state of the art equipment’” was enough to reduce impacts to less than significant, thereby rendering additional measures irrelevant. The Court, while not invalidating the District’s conclusion, required it to provide a “good faith, reasoned response” explaining why the specific technologies suggested by commenters, which are successfully used in other industrial facilities, could not be used for the project to further reduce impacts. Without such explanation, the Court contended that the EIR would not contain “a sufficient degree of analysis to enable decision makers to make an intelligent and informed decision,” pursuant to Guidelines section 15151.

– Casey Shorrock

Third District Court of Appeal Upholds EIR for Chico Walmart Expansion Against Challenge to Urban Decay Analysis

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In a partially published decision issued on October 3, 2019, the Third District Court of Appeal affirmed a judgment upholding an EIR for a Walmart expansion project in Chico against challenges to the EIR’s urban decay analysis. (Chico Advocates for a Responsible Economy v. City of Chico (2019) 40 Cal.App.5th 839.)

In 2015, Walmart applied to the city to expand its existing Chico store in a regional retail center that includes the Chico Mall and several national chain retail stores. A FoodMaxx grocery store is also nearby. Walmart planned to expand its existing store by approximately 64,000 square feet, add an eight-pump gas station, and create two new outparcels for future commercial development. Approximately 49,000 square feet of the new space would be used for grocery-related sales.

The city prepared an EIR for the project that included, among other things, a “robust 43-page urban decay analysis.” The urban decay analysis was supported by a 123-page expert study prepared by ALH Urban & Regional Economics. The purpose of the ALH study was to assess the economic impact of the project on retailers in the surrounding area and to evaluate the extent to which the project could contribute to store closures and urban decay. For purposes of the study, “urban decay” was defined as “visible symptoms of physical deterioration . . . that is caused by a downward spiral of business closures and long term vacancies . . . [and]. . . so prevalent, substantial, and lasting for a significant period of time that it impairs the proper utilization of the properties and structures, and the health, safety, and welfare of the surrounding community.”

The ALH study concluded that, on its own, the project would have a negligible impact on sales for competing retailers and that store closures were not expected to follow. Based on these findings, the EIR concluded that the project would not cause the type of severe economic effects that would lead to urban decay. With regard to cumulative impacts, the ALH study concluded that the project, when combined with other planned retail projects in the area, could induce the closure of one full-service grocery store. The city’s retail vacancy rate, however, would only increase by approximately one percent and would remain “well within the range of a robust, healthy commercial retail sector.” The EIR further explained that Chico has a strong history of “backfilling” store vacancies, that existing vacant properties are well-maintained, and that the city has regulations to prevent decay and blight. For these reasons, the EIR concluded that although some economic impacts were expected, cumulative impacts likely would not result in urban decay.

Following the city’s certification of the EIR, Chico Advocates for a Responsible Economy (CARE) challenged the urban decay analysis in an administrative appeal to the city council. CARE supported its challenge with its own “retail expert” report refuting the city’s analysis. The city council denied the appeal.  CARE then filed a petition for writ of mandate seeking to rescind the EIR and project approvals. The trial court denied the petition in full and CARE appealed.

On appeal, CARE challenged the EIR’s urban decay analysis on two grounds. First, CARE argued that the EIR relied on an “unnaturally constrained” definition of “urban decay” and, as a result, failed to treat the loss of “close and convenient shopping” as a significant environmental impact. Second, CARE argued that, due to flaws in the ALH study’s methodology, the EIR’s urban decay findings were not supported by substantial evidence.

Addressing the first issue, the court began its discussion by explaining the applicable standard of review for allegations that an EIR failed to include necessary information. Citing the Supreme Court’s recent decision in Sierra Club v. County of Fresno (2018) 6 Cal.5th 502, the court explained that CARE’s argument presented the predominantly legal question of whether the EIR included enough detail “to enable those who did not participate in its preparation to understand and consider meaningfully the issues raised by the proposed project,” which is subject to independent review. On this issue, the court found “CARE’s argument lacks merit – the City did not violate CEQA because the potential loss of close and convenient shopping is not an environmental issue that must be reviewed under CEQA.” “CEQA is concerned with physical changes in the environment,” the court explained, and “[a]lthough the loss of close and convenient shopping could impact some Chico residents psychologically and socially, such impacts are not, by themselves, environmental impacts.”

Next, the court turned to CARE’s attack on the methodology for the urban decay analysis. CARE alleged three flaws with the urban decay study’s methodology. First, CARE argued that the study relied on incorrect assumptions for calculating the anticipated grocery sales. Second, CARE argued that the study underestimated impacts on Chico stores by incorrectly assuming shoppers from the neighboring Town of Paradise would patronize the Walmart. Lastly, CARE argued that the study incorrectly assumed economic impacts would be spread amongst existing stores, rather than concentrated on the closest competitor – the FoodMaxx grocery.

In rejecting each of CARE’s arguments, the court explained that challenges to the EIR’s methodology are reviewed under the substantial evidence standard. Under this standard, challenges to the EIR’s methodology “must be rejected unless the agency’s reasons for proceeding as it did are clearly inadequate or unsupported.” Moreover, the court explained, when an agency is faced with conflicting evidence on an issue, it is permissible to give more weight to some evidence than others – mere “disagreement among experts” does not render an EIR inadequate.

In this case, the court concluded that CARE’s challenge amounted to “nothing more than differences of opinion about how the Project’s expected grocery sales should be estimated, how the Project’s market area should be defined, and which competitors are most susceptible to impacts from the Project.” These differences in opinion, the court explained, did not render the EIR’s analysis clearly inadequate or unsupported. Therefore, CARE’s challenge failed under the substantial evidence test.

The court further noted that although CARE’s own expert report showed additional store closures would occur, CARE failed to demonstrate how such closures would lead to urban decay. As the court explained, “Store closures, by themselves, do not amount to urban decay.”

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