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Fifth District Rules CARB Acted in Bad Faith in Selecting Baseline for Analysis of Low Carbon Fuel Standards Regulations

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In POET, LLC v. State Air Resources Board (2017) 12 Cal.App.5th 52 (“POET II”), the Fifth District Court of Appeal held that the California Air Resources Board (CARB) failed to comply with the terms of the writ of mandate issued by the same court in POET, LLC v. State Air Resources Board (2013) 218 Cal.App.4th 681 (“POET I”). The court invalidated the trial court’s discharge of the writ, modified the existing writ, and ordered CARB to correct its defective CEQA Environmental Analysis (EA).

Legal and Factual Background
CARB promulgated low carbon fuel standards (LCFS) in 2009 as required by the 2006 California Global Warming Solutions Act (“AB 32”). In promulgating the LCFS, CARB adopted an EA, the regulatory equivalent to an Environmental Impact Report, pursuant to CEQA. Those original regulations and the associated EA were the subject of litigation in POET I, where the Fifth District found that the EA violated CEQA by impermissibly deferring analysis of nitrous oxide (NOx) emissions from biodiesel fuel. The appellate court took the acknowledged “unusual” step of allowing the regulations to remain in effect, pending satisfaction of a writ of mandate (“2014 writ”).

In 2015, in response to the court’s ruling in POET I, CARB produced an updated EA, updated LCFS regulations (2015 regulations), and alternative diesel fuel regulations (ADF regulations). The EA analyzed the project using a 2014 baseline and determined that the regulations would not have significant impacts related to NOx emissions. On the return to the writ, the trial court sided with CARB and discharged the 2014 writ. This appeal followed.

Court’s Analysis
The Court of Appeal applied the abuse of discretion standard to its analysis of whether the lower court’s discharge of the 2014 writ was proper. The court concluded that CARB continued to violate CEQA and the 2014 writ by selecting a 2014 project baseline. The court explained that a normal existing-conditions baseline begins when the project commences and must include all related project activities. In addition, a regulatory scheme is a “project” under CEQA and includes all enactment, implementation, and enforcement activities. Here, the original regulations, 2015 regulations, and ADF regulations were related activities because they concerned the same subject matter, had a shared objective, covered the same geographic area, and were temporally connected.

Thus, by selecting 2014 as the baseline, the court found that the EA failed to consider how the original regulations, which remained in effect during and after POET I, encouraged and increased the use of biodiesel fuel and its effect on NOx emissions. According to the court, selecting such a limited baseline was not even “objectively reasonable” from the point of view of an attorney familiar with CEQA and the Guidelines. In addition, the court found that the flawed CEQA analysis was prejudicial because it deprived the public of a meaningful opportunity to review the effect of the agency’s actions on the environment.

Remedy
On remand, the court ordered that CARB review its project baseline. While declining to require a specific baseline date, CARB was instructed to select a “normal” baseline consistent with the court’s analysis and in any event, to not select a baseline date of 2010 or after. The court implied that the baseline could even have begun in calendar year 2006, consistent with then-Governor Schwarzenegger’s 2007 mandate to the agency to review fuel emissions.

The parties agreed that the ADF regulations were both severable and independently enforceable from the 2015 regulations. The court found that the 2015 regulations were also severable from the remainder of the LCFS regulations because, though more effective in their entirety, the remaining regulations would be complete and retain utility. Ultimately though, like in POET I, the court concluded that, on balance, suspending the regulations would cause more environmental harm than allowing them to remain.

Thus, the court reversed the order discharging the writ and ordered the superior court to modify the writ to compel CARB to amend its analysis of NOx emissions and freeze the existing regulations as they relate to diesel and its substitutes. In addition, the court ordered the superior court to retain jurisdiction, and to require CARB to “proceed diligently, reasonably and in subjective good faith.” Finally, the court ordered that if CARB fails to proceed in this manner, the superior court shall immediately vacate the portion of the writ preserving the existing regulations, and may impose additional sanctions.

 

Second District Holds that Failure to Lodge Administrative Record Barred Post-Trial Relief

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In The Urban Wildlands Group, Inc. v. City of Los Angeles (2017) 10 Cal.App.5th 993, the Second District Court of Appeal held that the mandatory relief provisions of Code of Civil Procedure section 473, subdivision (b), do not apply where counsel fails to lodge the administrative record in a CEQA proceeding and receives a judgment denying the petition for writ of mandate.

Despite agreeing by stipulation, counsel for the petitioner did not lodge the record with the court prior to trial. After a hearing on the merits of the matter, the trial court ruled that because the petitioner had failed to lodge the administrative record, it could not support its arguments. Subsequently, the petitioner filed a motion for discretionary and mandatory relief pursuant to Code of Civil Procedure section 473, subdivision (b). The trial court denied petitioner’s counsel’s motion for discretionary relief, ruling that counsel’s failure to lodge the administrative record did not rise to the level of excusable neglect. Nevertheless, the lower court granted petitioner mandatory relief, finding that counsel’s error had deprived the petitioner of its day in court.

The appellate court disagreed. The court held that Code of Civil Procedure section 473, subdivision (b), does not apply where, as here, there has been a trial on the merits. Thus, the court found, counsel’s error had not served to deny the petitioner its day in court. Rather, the error resulted in a failure to present sufficient evidence and therefore the mandatory relief provisions were inapplicable. The Court of Appeal reinstated the lower court’s original judgment denying the petition and complaint, and allowed the City of Los Angeles recovery of appellate costs from the petitioner.

Third District Court of Appeal Upholds State Air Resources Board’s AB 32 Cap-and-Trade Program

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In a 2-1 opinion, the Third District Court of Appeal upheld the auction-sale component of the cap-and-trade program created by the State Air Resources Board pursuant to the California Global Warming Solutions Act of 2006 (“AB 32”) in California Chamber of Commerce v. State Air Resources Board (2017) 10 Cal.App.5th 604.

As part of its regulations to implement AB 32, the State Air Resources Board created the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms, referred to as the ‘cap-and-trade program.’ The program imposes a cap on aggregate greenhouse gas emissions. Covered entities must either reduce their emissions below a threshold point or obtain offset credits or emissions allowances at the Board’s quarterly auctions or in a secondary market. Allowances are tradable, so participants can buy, bank, or sell them. Proceeds from the Board’s auction sales are kept in a fund to further AB 32’s purposes. Plaintiffs California Chamber of Commerce and Morning Star Packing Company filed two separate lawsuits challenging the regulations and the court consolidated the cases. The trial court ruled in favor of the Air Resources Board and both plaintiffs appealed.

The Court of Appeal considered two arguments: (1) whether the auction sales exceed the Legislature’s delegation of authority to the Board, and (2) whether the revenue generated by the auction sales amounts to a tax that violates the two-thirds vote requirement of Proposition 13. With respect to Plaintiffs’ first argument, the court considered whether the auction program is “(1) consistent and not in conflict with the statute and (2) reasonably necessary to effectuate the purpose of the statute.” The court held that by allowing the Board to design regulations that include “distribution of emissions allowances,” the Legislature gave broad discretion to determine how to implement the statute, and the auctioning of allowances does not exceed the scope of the delegation. In addition, the court found that the Legislature later ratified the auction system when it directed how to use the proceeds therefrom.

With respect to Plaintiffs’ second argument, the court found that the auction sales do not equate to a tax. Proposition 13 requires that any change in a State tax must be passed by a two-thirds vote of each house of the Legislature. Sinclair Paint Co. v. State Bd. of Equalization (1997) 15 Cal.4th 866 is the leading authority on application of Prop 13, but contrary to the ruling of the lower court, the Court of Appeal found the test from that case was inapplicable here. According to the court, Sinclair Paint did not hold that it applies to any “revenue generating measure.” Instead, Sinclair Paint sets forth rules to evaluate purported regulatory fees to determine whether they are taxes subject to Proposition 13. The Board’s cap-and-trade regulations do not purport to impose a regulatory fee, but instead call for the auction of allowances, which the court explained is an entirely different system. Thus, the Court of Appeal found, Sinclair Paint did not apply.

Because Sinclair Paint did not apply, the court looked to the general test for whether something is a “tax” subject to Proposition 13. The court explained that the hallmarks of a tax are: (1) it is compulsory, and (2) the payor receives nothing of particular value for payment. The court found that, regardless of the fact that the cap-and-trade program may increase the cost of doing business in California, the purchase of allowances through the Board’s auction is voluntary; businesses must simply make the judgment whether it is more beneficial to the company to make the purchase required by the program than to reduce emissions. In addition, the court emphasized that no entity has a vested right to pollute. Once purchased, the allowances are valuable, tradable commodities, conferring on the holder the privilege to pollute the air. Thus, the court found that participation in the auction system is voluntary and the purchaser receives a specific thing of value, so the auction system does not impose a tax.

Justice Hull concurred with the majority’s analysis of the first question, but disagreed with the second part of the opinion. In a lengthy dissent, Justice Hull argued that the cap-and-trade program is a tax because: (1) the purchase of auction credits by certain businesses is not voluntary, (2) the auction credits do not confer property rights, and (3) the use of the auction proceeds must be considered for determining whether a State exaction is a tax. Thus, Justice Hull concluded that the program is a “tax” of sorts, and because it was not passed by a 2/3 vote of the State Legislature, it violates Proposition 13.

Sixth District Rules County of Santa Cruz Did Not Engage in Piecemeal Review of Zoning Ordinances and Upholds Negative Declaration

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In Aptos Council v. County of Santa Cruz (2017) 10 Cal.App.5th 266, the Sixth District held that the County of Santa Cruz did not engage in piecemeal review when it separately adopted three different zoning ordinances. The court also upheld the negative declaration for an ordinance increasing the height and density of hotels.

The County planning department undertook an effort to overhaul various County code sections, including those dealing with zoning. As part of this effort, the following occurred: (1) in March 2013, the County considered an addendum to a negative declaration prior to adopting an ordinance that authorized administrative approval of minor exceptions to zoning site standards; (2) in September 2013, the planning department circulated a negative declaration finding that an ordinance increasing the height and density for hotels (the “Hotel Ordinance”) would not have a significant effect on the environment; and (3) in October 2013, the planning department prepared a notice of exemption for an amendment modifying the County’s sign ordinance (the “Sign Ordinance”). The Board adopted the Hotel Ordinance and the Sign Ordinance in 2014.

Petitioner argued that the three ordinances in question constituted a single project and the County’s actions amounted to piecemealing in violation of CEQA. The court disagreed. The court found that reforming certain zoning regulations—such as altering density requirements for hotels—was not a reasonably foreseeable consequence of the other regulatory reforms challenged. Because each ordinance operated independently and could be implemented separately, they were not considered a single project. While the ordinances all served the same stated objective of “modernizing the County code,” the court held that this was not the type of tangible objective that forms the basis of a single CEQA project.

The court also upheld the negative declaration for the Hotel Ordinance, finding that the County did not need to consider potential future development because it was too speculative to be reasonably foreseeable. Evidence in the record supported the argument that the County intended to stimulate development when it passed the ordinance, but the court found that still did not demonstrate that such development was reasonably foreseeable. Additionally, the initial study disclosed that the Hotel Ordinance would allow higher density and taller hotels but that the effects of future development were speculative until a specific development was proposed. And, the initial study explained that such development projects would be subject to their own CEQA review. Moreover, the court found that petitioner failed to meet its burden to show a fair argument that significant environmental effects may result from the ordinance.

California Supreme Court Holds that CEQA Requires EIRs for Projects Located within Coastal Zones to Identify Potential “Environmentally Sensitive Habitat Areas” as Defined by the California Coastal Act.

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In Banning Ranch Conservancy v. City of Newport Beach (2017) 2 Cal.5th 918, the California Supreme Court held that CEQA requires an EIR for a project located within a coastal zone to identify which areas in a project site might qualify as “environmentally sensitive habitat areas” (ESHA) under the California Coastal Act and account for those areas in its analysis of project alternatives and mitigation measures.

Background

Banning Ranch is a privately owned 400-acre tract of land. A small portion of the site is within the City of Newport Beach; the remainder is in unincorporated Orange County, within the City’s Sphere of Influence. The City’s general plan sets forth two options for the site. The preferred option is community open space. The second option would allow construction of up to 1,375 residential units, 75,000 square feet of retail facilities, and 75 hotel rooms. The City was unable to raise funds to buy Banning Ranch for open space. So in 2008, Real Party in Interest Newport Banning Ranch, LLC (NBR) submitted a proposal for development consistent with the second option for the site outlined in the general plan.

The Banning Ranch site is in a designated coastal zone under the Coastal Act. Under the Coastal Act, local governments within the coastal zone must submit a local coastal program for Coastal Commission approval. The program consists of a coastal land use plan (CLUP) and implementing regulations. The City has not yet adopted the regulatory component of its local coastal program, so the Coastal Commission exercises permitting authority over the Banning Ranch development. Further, the Banning Ranch site is not included in the City’s CLUP.

Because the site is within a coastal zone, the Costal Act places limits on what can be developed on the site. The Coastal Act specifies that ESHA “shall be protected against any significant disruption of habitat values, and only uses dependent on those resources shall be allowed within those areas.” (Pub. Resources Code, § 30240, subd. (a).) ESHA is defined as an area in which plant or animal life or their habitats are either are or especially valuable because of their special nature or role in an ecosystem and which could be easily disturbed or degraded by human activities and developments. (Pub. Resources Code, § 30107.5.) In order to issue a coastal development permit for the project, the Coastal Commission must determine whether the project violates the ESHA requirements of the Coastal Act.

The City prepared an EIR for the Banning Ranch project. Although the EIR contained an extensive analysis of biological impacts, it did not identify potential ESHA or discuss the subject in substantive detail. Rather, it noted that the project would require a permit from the Coastal Commission, which would determine whether the site contained ESHA.

Comments on the draft EIR criticized the EIR for omitting an analysis of ESHA. The Coastal Commission submitted 15 pages of staff comments, suggesting that the EIR should address whether the proposed development was consistent with the policies of the City’s CLUP and the Coastal Act. The letter pointed out that the development must avoid impacts to ESHA and recommended that the EIR use the CLUP, which includes criteria for the determination of ESHA, to evaluate sensitive habitat areas and appropriate buffer zones. The letter concluded that based on its preliminary analysis, Coastal Commission staff had found the project to be inconsistent with the ESHA requirements of the Coastal Act. Commission staff requested that the EIR more fully consider alternatives that would avoid ESHA impacts.

In the final EIR, the City responded to comments, but maintained that it was not required to reach a legal determination as to whether Banning Ranch contained ESHA. The responses to comments explained that this determination would be made by the Coastal Commission at the time the applicant applies for a coastal development permit. The responses stated: “no conclusions of ESHA can and will be made by the City at this time as part of the EIR process that would in any way bind the Coastal Commission or elucidate on the Coastal Commission’s ultimate conclusions…. Rather, as appropriate under CEQA, the City has analyzed the impacts of the project, and concluded that they can be reduced to a less-than-significant level or avoided with appropriate measures.” In response to the Coastal Commission staff’s comments, the final EIR explained:

The purpose of the Draft EIR is to analyze a proposed project’s impact on the physical environment. It is not, in and of itself, a policy consistency analysis, except to the extent that such inconsistencies reveal impacts that otherwise are not discussed. … [T]he Draft EIR analyzes the proposed Project’s impact on biological resources, including federal and State listed endangered and threatened species, sensitive plant and animal species, and specific habitats such as wetlands and vernal pools. All impacts to these resources would be mitigated or avoided with the Mitigation Program. … The Draft EIR acknowledges that the Coastal Commission makes the determination as to whether any or all of these constitute ESHA under the Coastal Act, and application of the policies of the Coastal Act to the existing conditions on the Project site would be undertaken as part of the Coastal Commission’s Costal Development Permit process.

The City certified the final EIR in 2012 and approved the project. Petitioner Banning Ranch Conservancy (BRC) filed a petition for writ of mandate, contending that the EIR did not adequately analyze environmental impacts and mitigation measures with respect to ESHA, instead deferring this critical analysis to the Coastal Commission. BRC also alleged that the City had violated the requirement under the City’s general plan to coordinate with and work with the Coastal Commission to identify habitats for preservation, restoration, and development. The trial court denied the petition as to Petitioner’s CEQA claims, but granted the petition as to the General Plan claim. The Court of Appeal reversed, holding that the City complied with its General Plan. The Court of Appeal agreed with the trial court that the EIR complied with CEQA. With respect to BRC’s ESHA arguments, the Court of Appeal held that “CEQA does not require the City to prognosticate as to the likelihood of ESHA determinations and coastal development permit approvals.”

The California Supreme Court’s Opinion

The Supreme Court reviewed the City’s decision not to identify ESHA in the EIR under the “de novo” standard of review. The Court reasoned that “whether an EIR has omitted essential information is a procedural question” to which the court owes no deference to the agency.

Having established that the de novo standard of review applies, the Court rejected the City’s argument that CEQA imposes no duty on the City to reach conclusions as to whether the Project site includes ESHA. The Court explained that “CEQA sets out a fundamental policy requiring local agencies to ‘integrate the requirements of [CEQA] with planning and environmental review procedures otherwise required by law or by local practice so that all those procedures, to the maximum feasible extent, run concurrently, rather than consecutively.” (Slip Op. pp. 18–19, quoting Pub. Resource Code, § 21003, subd. (a).) Likewise, the CEQA Guidelines state that “‘[t]o the extent possible, the EIR process should be combined with the existing planning, review, and project approval process used by each public agency.”’ (Slip Op. p. 19, quoting CEQA Guidelines, § 15080.) Additionally, agencies are encouraged to consult with responsible agencies in preparing EIRs “‘so that the document will meet the needs of all the agencies which will use it.’” (Slip Op. p. 19, quoting CEQA Guidelines, § 15006, subd. (g).) Here, concluded the Court, the City ignored its duty to integrate CEQA review with the requirements of the Coastal Act, and “gave little consideration to the Coastal Commission’s needs.”

Further, reasoned the Court, the CEQA Guidelines require an agency to consider related regulatory regimes, such as the Coastal Act, when discussing project alternatives. In particular, an EIR must “‘describe a range of reasonable alternatives to the project,’ or to its location, that would ‘feasibly attain’ most of its basic objectives but ‘avoid or substantially lessen’ its significant effects.” (Slip Op. p. 19, quoting CEQA Guidelines, § 15126.6, subd. (a).) Among the factors that may be taken into account when addressing the feasibility of alternatives is whether there are “other plans or regulatory limitations [and] jurisdictional boundaries (projects with a regionally significant impact should consider the regional context).”’ (Slip Op., quoting CEQA Guidelines, § 15126.6, subd. (f)(1).) Projects with substantial impacts in coastal zones are, by definition, “regionally significant.” (Slip Op. pp. 19–20, citing CEQA Guidelines, § 15206, subd. (b)(4)(C).) Accordingly, “the regulatory limitations imposed by the Coastal Act’s ESHA provisions should have been central to the Banning Ranch EIR’s analysis of feasible alternatives.” (Slip Op., p. 20.)

The City and amicus curiae League of California Cities argued that lead agencies under CEQA are not required to make legal determinations that are within the sole jurisdiction of another agency. The League of Cities voiced a concern that ESHA identifications in EIRs might be subject to de novo judicial review. The Court rejected these arguments, reasoning that “a lead agency is not required to make a ‘legal’ ESHA determination in an EIR. Rather, it must discuss potential ESHA and their ramifications for mitigation measures and alternatives when there is credible evidence that ESHA might be present on a project site.”  (Slip Op., p. 21.) Such discussions would only be reviewed by the courts for “sufficiency.” (Ibid.)

The City further contended that the identification of potential ESHA would be merely speculative. The Court rejected this argument because, on the record before it, there had been positive identifications of ESHA on the Project site by Coastal Commission, and the applicant’s own consultant had identified areas of potential ESHA. The Coastal Commission staff had also offered the City assistance in identifying ESHA. Thus, the City had “ample bases” for an informed ESHA analysis. Further, the City routinely identified ESHA in EIRs for projects within the City’s CLUP. The fact that Banning Ranch is not in the CLUP did not excuse the City from identifying ESHA in the Banning Ranch EIR.

The Court also rejected the City’s argument that ESHA would be fully considered during the coastal development permitting phase of the project. The Court explained that such a delay “is inconsistent with CEQA’s policy of integrated review.” (Slip Op., p. 23, citing Pub. Resources Code, § 21003, subd. (a).) Further, the City’s position was inconsistent with CEQA’s requirement that lead agency’s “consider related regulations and matters of regional significance when weighing [the feasibility of] project alternatives.” (Slip Op., p. 23, citing CEQA Guidelines, § 15126.6.) Moreover, lead agencies “must take a comprehensive view in an EIR.” (Slip Op., p. 23, italics added by Court, citing Pub. Resources Code, § 21002.1, subd. (d).)

Finally, the Court rejected the City’s supposition that if the City were required to identify ESHA in the EIR, it would have to accept the Coastal Commission staff’s opinions about what constitutes ESHA and what mitigation measures are required. The Court noted that CEQA does not require a lead agency to agree with the opinions of other agencies. But to serve the public and decisionmakers, the EIR must lay out competing views. Although the Coastal Commission makes the final ESHA determination, the public and the members of the Coastal Commission are “entitled to understand the disagreement between commission staff and the City on the subject of ESHA.” (Slip Op., p. 25.)

Because the Court determined the Banning Ranch EIR violated CEQA for failing to identify ESHA and account for ESHA in its discussion of alternatives and mitigation measures, the Court declined to address the general plan issues.

Whit Manley, of counsel at Remy Moose Manley, LLP, represented Respondent City of Newport Beach in the case.

Fourth District Upholds EIR for Master-Planned Community and Concludes That County Not Required to Recirculate

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On March 15, 2017 the Fourth District certified for publication its February 4, 2017 decision in Residents Against Specific Plan 380 v. County of Riverside (2017) 9 Cal.App.5th 941, upholding the EIR for a master- planned community (project). A citizens group challenged the sufficiency of the EIR and the county’s approval process on six grounds. The court found for the county and real party in interest, Hanna Marital Trust (applicant), on every count.

The project proposes a master-planned community with seven planning areas containing medium-density residential housing, mixed uses, commercial retail, and dedicated open space on 200 acres of undeveloped land in Riverside County. Planning area 6, the mixed use area, was analyzed as potentially providing for the development of a Continuing Care Retirement Community (CCRC) for seniors.

On July 28, 2011, the County Planning Department released a Draft EIR (DEIR). The DEIR stated that mitigation measures would reduce the environmental impacts to a below significant level, except for air quality and noise. During the public comment period, the South Coast Air Quality Management District (SCAQMD) and the City of Temecula raised concerns about the project’s air quality impacts. The final EIR (FEIR) was released in January 2012 and included responses to SCAQMD’s and Temecula’s comments. The FEIR reflected changes in the location of some project elements, but was “in its basics identical” with the project as described in the DEIR.

The Planning Commission reviewed the FEIR in April 2012 and suggested revisions, which were subsequently presented to the Commission in October 2012. The Commission recommended approval of the FEIR and the Project to the Board of Supervisors. The Board reviewed the FEIR at its December 11, 2012 meeting, where it considered some modifications to the project and Residents Against Specific Plan 380 (petitioners) suggested additional noise mitigation measures. At its December 18, 2012 meeting, the Board tentatively approved the FEIR, contingent on finalization of the modifications. On November 5, 2013, the Board approved the finalized FEIR, general plan amendment, zone change, and Specific Plan 380. The EIR resolution included findings of fact, a mitigation monitoring and reporting plan, and a statement of overriding considerations. The same day, the county clerk posted a Notice of Determination (NOD) that erroneously used an out-of-date project description.

On November 18, 2013, petitioners filed a petition for a writ of mandate, which was denied by the trial court. This appeal followed.

First, the Fourth District concluded that the Board did not substantially modify the EIR after approving it. Because the Board only tentatively approved the project in December 2012, the final approval in November 2013 reflected the Plan’s modifications. Similarly, the court disagreed with the petitioners’ argument that the findings, statement of overriding considerations, and mitigation plan were not timely and concurrently approved.

Second, the court concluded that the NOD substantially complied with the informational requirements of CEQA, despite its project description errors. The court also noted that the petitioners could not show that the errors were prejudicial because they filed the suit well before the statute of limitations had run.

Third, the court held that the changes made by the Commission and Board were not significant enough to require recirculation of the EIR. In reaching its determination, the court relied on CEQA Guidelines § 15088.5, subd. (a), stating that a lead agency must recirculate an EIR when significant new information is added that reveals a substantially new or increased impact. The court rejected the petitioners’ argument of increased traffic impacts, holding that only traffic patterns would be affected, not intensity. The court also rejected the petitioners’ contention that increased biological impacts would result from moving the mixed-use area further north, as the open space region was already adjacent to it. Petitioners’ argument of increased noise impacts was contradicted by the county’s expert. Finally, the petitioners failed to substantiate their claim of potential land use inconsistencies. Therefore, the County had an adequate basis for not recirculating the EIR. Petitioners’ reliance on Vineyard Area Citizens for Responsible Growth v. City of Rancho Cordova (2007) 40 Cal.4th 412 and Save our Peninsula Committee v. Monterey County Board of Supervisors (2001) 87 Cal.App.4th 99 were inapposite, as the EIR did not reveal facially significant new impacts nor areas necessitating further factual development.

Fourth, the court concluded that the EIR adequately analyzed the impacts of the mixed-use area under the rubric of a proposed CCRC. Petitioners alleged that by analyzing only a CCRC, and not other potentially higher impact uses, the EIR’s analysis of the mixed-use planning area was improperly narrow in scope. The court rejected this argument because substantial evidence supported the County’s decision to limit the scope of the analysis to a CCRC. Even if the applicant did not build a CCRC, the project plan restricted the applicant to other permitted uses in the planning area, and only if they would not incur additional environmental impacts. Nor, the court stated, does CEQA require the county to analyze what are merely possible development schemes.

Finally, the court ruled that the EIR adequately considered the specific suggestions for mitigating the project’s air quality and noise impacts from SCAQMD, Temecula, and the petitioners. Regarding mitigation for air emission impacts proposed by SCAQMD and Temecula, the county could justify why the measures were not adopted, why they were infeasible given the project’s timeline and parameters, or why they were duplicative with measures already adopted. SCAQMD’s proposal to utilize lower emission vehicles did not reflect the construction equipment anticipated to be reasonably available. Temecula’s suggestion of applying the 2010 Energy Code was duplicative of the requirement to exceed the 2008 Code emission standards by 15%, and the code in force at the time of construction would control in any event. Furthermore, the county was not required to adopt the specific prescriptive emission reduction measures in the Green Building Standards Code, but could opt for performance-based standards that are less likely to incur enforcement and enforceability issues. With respect to the additional noise mitigation measures proposed by the petitioners, these were found to be untimely raised more than a year after the comment period had closed. Therefore, the county was not obligated to respond. Moreover, the county was justified in not adopting these noise mitigation measures because they require electric construction equipment that may not be available or may duplicate existing requirements.

 

Legislative Analyst’s Office Concludes State Government Has Limited Ability to Increase Housing Supply; the Solution Lies with Local Governments

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On March 8, 2017, the California Legislative Analyst’s Office (LAO) released its report Do Communities Adequately Plan for Housing?, which considers whether the housing elements of city and county general plans achieve their objective of meeting housing needs. The report is not optimistic.  While it offers a few suggestions that the Legislature could consider to encourage cities and counties to increase their housing supplies, the report concludes that real change will only come with a “major shift in how communities and their residents think about and value new housing.” Without a paradigm shift in favor of more residential development, “no state intervention is likely to make significant progress on addressing the state’s housing needs.”

As reported in LAO’s earlier report, California’s High Housing Costs: Causes and Consequences (March, 2015), home prices and rents are higher in California than nearly anywhere else in the U.S. These high costs are driven by a lack of housing supply to meet the state’s demand. To combat this, Governor Brown proposed creating new state rules to streamline housing development approvals. In Considering Changes to Streamline Local Housing Approvals (May, 2016), the LAO considered this streamlining proposal, but cautioned that streamlining provisions would have little effect if local planning and zoning rules did not provide adequate opportunities for projects to take advantage of the streamlining. In the new report, the LAO builds upon these previous studies to consider how the state government could influence local planning and zoning rules to encourage cities and counties to approve more housing development projects.

The report explains that the primary existing means for the state to combat inadequate local planning and zoning laws is the state’s Housing Element Law. This law requires city and county general plans to include a housing element, which outlines a long-term plan to meet the community’s existing and projected housing demands. The housing element must also demonstrate how the city or county plans to accommodate its “fair share” of the regional housing needs allocated to that community as part of the Regional Housing Needs Allocation (RHNA) process. Each housing element must provide an inventory of sites designated for new housing sufficient to meet the community’s fair share of regional housing needs.

The new LAO report looks at existing deficiencies in local housing elements. It notes that forecasting housing needs and identifying ideal sites for future housing, is difficult, and rarely accurate. Community resistance to new housing complicates this already difficult task. Residents frequently push back against the projections of future housing needs and question whether their community should bear the responsibility of accommodating new growth. Partly because of this push-back, many cities and counties seem to place a low priority on updating their planning and zoning laws to accommodate future housing needs. Indeed, about one-fifth of cities and counties have gone more than 20 years without a comprehensive update to their land use and circulation elements. With limited staff and budget, the California Department of Housing and Community Development can do little to ensure that cities and counties are fully vetting the sites available to them for future housing.

The report further explains that evidence shows that the housing element process is not meeting its goals. For one, recent RHNA projections are not fully capturing demand for housing in many communities. For instance, in the San Francisco Bay area, cities and counties permitted roughly the amount of housing projected to be needed to meet their fair share of regional housing needs, but the evidence shows there is still significant unmet demand for housing. Typical monthly rents exceed $2,000, more than twice the national average, demonstrating that there is a housing shortage in the Bay Area.

Further, there are disincentives to homebuilding that make it difficult to anticipate places where developers will ultimately propose housing. For instance, housing element inventories frequently overlook sites that need a zone change to accommodate new housing. The Housing Element Law is supposed to encourage local agencies to rezone properties that could accommodate residential development, but many local agencies fail to do so.

The report offers a few options for the Legislature to consider to make the Housing Element Law more effective. First, the process of developing RHNA projections could be improved to better account for unmet housing demands and give cities and counties a more realistic view of their housing needs. For instance, communities with high rents could be projected to have a higher RHNA goal, since higher rents typically mean there is a housing shortage. The state could also increase local fiscal incentives to build housing, but doing this could be difficult to implement, particularly if it would require tax increases.

The report ends by noting that absent dramatic changes to preempt local land use decisionmaking—which would likely be met with fervent resistance—there is not much the state can do to ensure cities and counties approve a sufficient amount of new housing development projects to meet all income needs. As concluded in the report:

Convincing Californians that a large increase in home building—one that would change the character of communities—could substantially better the lives of future residents and future generations necessitates difficult conversations led by elected officials and other community leaders interested in those goals. Unless Californians are convinced of the benefits of more home building—targeted at meeting demand at every income level—the ability of the state to alter local planning decisions is limited.

 

 

California Air Resources Board 2017 Climate Change Scoping Plan Update Issued

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In January 2017, the California Air Resources Board (CARB) released the Draft 2017 Climate Change Scoping Plan Update. The Proposed Scoping Plan identifies the overall strategy to reduce greenhouse gas (GHG) emissions by 40 percent below 1990 levels by 2030—the target codified in SB 32. The strategy requires contributions from all economic sectors and includes a combination of extending key reduction programs and new actions that would prioritize direct emissions reductions.

The Proposed Scoping Plan continues the cap-and-trade program through 2030. The analysis in the plan finds that cap-and-trade is the lowest cost, most efficient policy approach to meeting the 2030 goal. According to the analysis, even if other measures fall short, cap-and-trade provides certainty that California will meet the 2030 target emissions reduction. The agency is also evaluating potential changes to the cap-and-trade program to “support greater direct GHG emissions reductions.” Under evaluation are measures which include reducing the offset usage limit, redesigning the allocation strategy to support increased technology and energy investments to reduce GHG emissions, and reducing allocation for entities with criteria or toxic emissions that exceed a predetermined baseline.

Other key components of the overall approach include: a 20 percent reduction in GHG emissions from the refinery sector; continued investment in renewable energy; efforts to reduce emissions of short-lived climate pollutants; and increased focus on zero- and near-zero emission vehicle technologies.

CARB is currently seeking comments on the Proposed Scoping Plan. The comment period was recently extended until April 10, 2017. A public board meeting on the Final Proposed Scoping Plan is scheduled for June 22-23, 2017.

High Court Reverses Appellate Decision Limiting Use of Delisting Petitions under the California Endangered Species Act, But Avoids Reaching Merits of Fish and Game Commission’s Decision Denying Delisting Petition for Coho Salmon

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On February 27, 2017, the California Supreme Court issued its unanimous opinion in Central Coast Forest Association v. Fish and Game Commission (2017) 2 Cal.5th 594, reversing an appellate decision holding that Plaintiff’s petition to delist coho salmon south of San Francisco from the register of endangered species was procedurally improper.

Background

In 1995, the Fish and Game Commission (Commission) listed coho salmon populations south of San Francisco as endangered under the California Endangered Species Act (CESA) (Fish and G. Code, § 2050 et seq.). In 2004, the Commission joined this population with coho Salmon north of San Francisco (to Punta Gorda in Humboldt County) as members of an “evolutionary significant unit.” That same year, Central Coast Forest Association and Big Lumber Creek Lumber Company (Plaintiffs) petitioned to delist coho salmon south of San Francisco Bay. The delisting petition argued that the coho salmon south of San Francisco had been artificially introduced into the area and have since then been maintained via hatcheries, and so are not “native” within the meaning of CESA. The Commission denied the petition.

The trial court found in favor of plaintiffs and the Commission appealed. In a 2–1 decision, the Third District Court of Appeal held that the petition to delist the endangered coho salmon under CESA failed for the procedural reason that, according to the Court of Appeal, CESA only authorizes delisting when a species is no longer endangered. Where, as in the case before it, plaintiffs challenge the original listing decision, they must do so via a mandamus action in state court. Based on this perceived procedural flaw, the Court of Appeal did not reach a decision on the merits of the case.

The Supreme Court granted review of the case in February 2013.

The Supreme Court’s Decision

The Supreme Court held that the Court of Appeal erred in concluding that a delisting petition is an improper vehicle for challenging an “original listing” decision of the Commission. The Court explained that no provision of CESA directly establishes that the Commission’s decision to delist cannot be based on new evidence showing that the listed species does not qualify for listing. Rather, CESA’s delisting mechanisms make clear that the delisting decision can be made “at any time based upon a petition or other data available to the [D]epartment and the [C]ommission.” (Fish and G. Code, § 2077, subd. (d).) Moreover, CESA includes requirements for the Department of Fish and Wildlife to make delisting recommendations based on the “best scientific information available,” reflecting a Legislative intent that the Commission’s decisions should evolve along with scientific understanding. Other provisions in CESA similarly suggest that the Commission has broad authority to reconsider its listing decision based on new information. The Court held, therefore, that the appellate court erred in holding that it is procedurally improper to use a delisting petition as a mean to challenge the Commission’s decision to list a species as endangered.

Although the Court had granted review of the question whether the delisting petition filed by plaintiffs for coho salmon contained sufficient information to warrant the Commission’s further consideration, the Court chose not to reach that question. Instead, given its reversal of the procedural ruling, the Court found it appropriate to remand the matter to the Court of Appeal to consider the unresolved issues on the merits in the first instance.

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