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First District Holds CEQA Review of Freight Operations Preempted by Federal Law

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On September 29, 2014, the First District Court of Appeal affirmed the trial court’s determination that federal law preempted review of the EIR certified by North Coast Railroad Authority (NCRA) approving Northwestern Pacific Railroad Company’s (NWPRC) freight operations on NCRA’s tracks. The court also rejected petitioners’ claims that NCRA and NWPRC were estopped from arguing that CEQA did not apply. Friends of the Eel River v. North Coast Railroad Authority, Case No. A139222 (September 29, 2014).

The Interstate Commerce Commission Termination Act (ICCTA) was enacted to eliminate outdated, burdensome regulatory restrictions on the rail industry. ICCTA grants the Surface Transportation Board (STB) exclusive jurisdiction over rail operations, whether or not they take place entirely within one state. The rail line at issue in this dispute was the Northwest Pacific Railroad line, which extends from Arcata to Lombard, with its geographical center in Willits. Above Willits lies the Eel River Division of the line, and below is the Russian River Division. The line, in serious disrepair, secured state funds for repair work on the Russian River Division. NCRA indicated it would issue a categorical exemption for the repair work, but would prepare an EIR for the freight operations within that Division. As part of a 2008 settlement with the City of Novato, which had challenged the notice of exemption, the parties entered a consent decree requiring NCRA to perform certain work and comply with CEQA in doing so. In 2011, NCRA certified an EIR approving resumed freight rail service from Willits to Lombard. Petitioners challenged this certification and sought to halt rail operations pending additional CEQA review. In 2013, NCRA passed a resolution rescinding the EIR certification, stating that the EIR was not a legal prerequisite to NWPRC’s operation of the line, given STB’s exclusive jurisdiction over the line. Petitioners challenged the railroads’ claim of federal preemption, and argued in the alternative that the railroads were estopped from asserting preemption given their prior agreement to comply with CEQA. The court held that a state statute requiring environmental review as a condition to railroad operations is preempted by ICCTA. The court only found support for its holding in lower court decisions, but noted there was no contradictory federal appellate court decision. In concluding that ICCTA expressly preempts CEQA review of proposed railroad operations, the court distinguished the recent Third District decision in Town of Atherton v. California High Speed Rail Authority (2014) 228 Cal.App.4th 314, which required CEQA analysis as part of the process for determining where to place a rail line, noting that the issue in Atherton differed from this case’s issue of resuming rail operations. The court was not persuaded that the market participant doctrine, which counteracts preemption where government agencies act as property owners or purchasers, applied here. The court noted that the doctrine is typically used defensively. Even if the decision to prepare an EIR were proprietary, a writ proceeding by a private citizen’s group challenging the adequacy of the review would be regulatory in nature and would not be part of that proprietary action. The court acknowledged that its holding contradicted Atherton, and respectfully disagreed with the Atherton court’s analysis of the market participant doctrine.

On the issue of judicial estoppel, the court noted that estoppel was an equitable doctrine and thus its application was discretionary. Regardless, the court found NCRA and NWPRC never asserted a contrary position on federal preemption in a prior judicial or quasi-judicial proceeding. Even if the elements of judicial estoppel were satisfied, the trial court had declined to apply the doctrine due to policy reasons, stating that estoppel would burden STB’s exclusive jurisdiction to regulate freight operations. Neither could NCRA’s preparation of an EIR estop its current position that no EIR was required, as there was no final ruling on the merits on the issue of federal preemption of CEQA with respect to railroad operations.

California Supreme Court grants Petition for Review in Sierra Club v. County of Fresno

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In Sierra Club v. County of Fresno (2014) 226 Cal.App.4th 704, the Fifth District Court of Appeal held that an EIR prepared for an active adult community in Fresno County violated CEQA for failing to include an analysis correlating the project’s regional air emissions to specific health impacts that could result. In reaching this conclusion, the Court of Appeal reviewed the EIR de novo, rather than for substantial evidence. The Court of Appeal also held that the mitigation measures adopted by Fresno County to reduce the project’s otherwise significant and unavoidable air quality impacts violated CEQA for several reasons, including the failure to specify adequate performance standards. Real Party in Interest, Friant Ranch, LP, represented by RMM attorneys James Moose, Tiffany Wright, and Laura Harris, filed a petition for review. The petition asked the Court to clarify the applicable standard of review for claims that an EIR includes insufficient information on a topic required by CEQA. The petition also requests guidance from the Court as to the standards of adequacy of mitigation measures adopted to reduce, but not eliminate, a project’s significant and unavoidable impacts. Several amicus curiae letters were filed in support of the petition, including letters on behalf of the League of California Cities and the California State Association of Counties, the CEQA Research Council, the Building Industry Legal Defense Foundation, and the Association of Environmental Professionals. On October 1, 2014, the Supreme Court granted the petition for review. Although it is not known at this time what issues the Court will consider, it is hoped that the Court’s opinion will provide useful guidance to CEQA practitioners and the lower courts concerning CEQA’s informational disclosure and mitigation requirements.

Governor Brown signs SB 270, the first statewide ban on single-use plastic bags

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Governor Jerry Brown brought a small order of consistency to the State when he signed SB 270 (Padilla) on September 30, 2014. The bill prohibits grocery stores and pharmacies from offering customers single-use plastic bags after July 2015. The same ban goes into effect for convenience stores and liquor stores the following year. In a statement on the signing available here, the Governor’s office cited similar bans on single-use plastic bags adopted by ordinance in over 120 local government jurisdictions.

Environmentalists have been especially supportive of the efforts to secure a state-wide ban on single-use plastic bags, with many citing the adverse impact of these bags on ocean life along California’s coast. The bill was also supported by retailers and grocery stores, which cited a need for statewide consistency in place of the current approach of regulation via a multitude of local ordinances. The bill provides a small amount of competitive loan funds, administered through CalRecycle, to businesses transitioning to the manufacture of reusable bags.

It should be no surprise to CEQA practitioners, in light of the multiple published cases resulting from Save the Plastic Bag Coalition’s efforts, that the statewide ban is opposed by plastic bag manufacturers. Plastic bag interests have threatened to initiate the signature gathering process to place a referendum on the bill in the 2016 ballot. But placing a referendum on the 2016 ballot will be no easy task, so it remains to be seen whether these are empty threats from the bill’s opponents.

Reasonably necessary attorney and paralegal time recoverable as costs of preparing the record of proceeding

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In this case, the Fourth Appellate District allowed the County of San Diego to recover over $37,000 in costs for preparing an administrative record, including costs for reasonably necessary paralegal and attorney labor. Otay Ranch, L.P. et al., v. County of San Diego (Sept. 29, 2014), Case No. D064809.

The controversy in this case originates with the County of San Diego’s approval of a mitigated negative declaration for a remediation project at the former Otay Skeet and Trap Shooting Range (the project). Former owners of the shooting range, Otay Ranch, Sky Communities, and Sky Vista, filed a petition for writ of mandate challenging the county’s remediation project. The plaintiffs argued that an EIR was necessary and that the county’s remediation plan did not comply with the Health and Safety Code.

Petitioners elected to prepare the administrative record in this case. After a number of delays, petitioners and the County met to discuss the proposed CEQA record. The County indicated that the record, in its current state, was woefully inadequate. The record improperly included numerous files not related to the project while omitting many necessary, project-specific files. After this conference, the petitioners voluntarily dismissed their CEQA cause of action. They then filed an amended petition and continued to pursue their Health and Safety Code cause of action. But petitioners never filed an administrative record, so the County reclaimed responsibility for preparing the administrative record.

The County did not have the resources available to prepare the administrative record in the limited time available. It therefore employed the help of the outside law firm representing it in the litigation to prepare the record. County’s outside counsel and paralegals worked extended hours to prepare the record in time to file with the County’s opposition briefing. This work included 74 hours of attorney time and 67 hours of paralegal time. The final record included over 300 documents and 18,000 pages, spanning many years of project history—all for a challenged MND. Surprisingly, the day after the county filed and served the administrative record, petitioners dismissed their entire action.

The County subsequently filed a memorandum of costs seeking recovery of approximately $66,000 for preparation of the administrative record. Petitioners moved to tax the majority of these costs. They argued that attorney and paralegal hours could not be included in the cost award for preparation of the administrative record. The County responded that the costs represented the reasonably necessary labor costs of “persons with specialized knowledge,” which is a recoverable record cost. Both the trial court and appellate court agreed.

The County submitted compelling declarations that it was necessary for the attorney and paralegal to be actively involved in reviewing and organizing the record. The documents proposed to be included in the record were technically complex and resulted from a complicated and long procedural history. Specific knowledge and understanding of the project was necessary for the individuals recreating the record. Therefore, the hours spent by the attorney and paralegal were reasonably necessary to the preparation of an adequate administrative record. The trial court awarded $37,528 for record preparation costs, representing the County’s costs incurred after the date the County decided to prepare the administrative record itself. The appellate court found that the trial court did not abuse its discretion when reaching this outcome, so the trial court’s award stood.

Of note in this case, the appellate court dismissed two petitioners from the appeal. The court determined Otay Ranch lacked capacity to appeal because it was a cancelled limited partnership. The court was not convinced that the appeal was part of Otay Ranch’s “winding up” process since the partnership had been cancelled and had completed winding up its affairs well before the appeal. Likewise, Sky Communities lacked capacity to appeal because it was a suspended corporation. A suspended corporation may not prosecute or defend an action, nor appeal from an adverse judgment. Sky Communities insisted the defect was not fatal because the Franchise Tax Board could always revive the corporation, retroactively validating the earlier notice of appeal. But the court noted the Board had not yet issued a certificate of revivor and Sky Communities remained a suspended company lacking the capacity to appeal.

Analysis and Conclusion

The size and complexity of administrative records continues to grow, straining the resources of local governments. However, this case offers hope that at least some courts appreciate the burden of record costs in CEQA litigation. The Fourth Appellate District’s opinion recognizes that, for projects with lengthy procedural history or other technical aspects, specialized knowledge and the expertise of paralegals and attorneys may be required to produce a record sufficient for certification. This characterization is likely applicable to numerous CEQA records, which commonly span tens of thousands of pages as a result of increasingly strict rules created by the courts for CEQA records. Based on this case, local governments should carefully document time reasonably spent by staff and any necessary outside assistance on record preparation in the event these costs are recoverable.

This case also serves as an important reminder for both potential CEQA petitioners and real parties to maintain active partnership or corporate standing. Dissolved partnerships and inactive corporations cannot pursue CEQA litigation.

Draft desert renewable energy conservation plan released for public review

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Following a joint effort, the U.S. Department of the Interior and the California Natural Resources Agency released the draft Desert Renewable Energy Conservation Plan (DRECP) for public comment on September 26, 2014. This plan is intended to facilitate streamlined permitting of renewable energy projects on federal and non-federal land while ensuring the conservation of sensitive ecologic desert resources on over 22 million acres of California desert. The Plan emphasizes a “landscape” level approach to planning for renewable resource development, as opposed to project-by-project and species-by-species level review.

The DRECP addresses numerous renewable resources, including solar (photovoltaic and thermal), wind, and geothermal. In addition, the plan covers a broad scope of activities associated with the development of renewable resources, such as construction, operation, maintenance, and decommissioning of projects, as well as activities related to transmission lines in the covered areas. Further, the plan identifies numerous proposed “covered species.” These plant and animal species will be the subject of a long-term “take” permit for projects that proceed in a manner consistent with the DRECP.

Currently, the draft DRECP identifies six alternative approaches for meeting renewable energy and conservation goals through 2040. Key components of the plan include designation of renewable energy development areas by BLM, a general conservation plan allowing streamlined permitting by FWS, and a natural community conservation plan developed by the California DFW, which will identify regional or area-wide protections for plants and animals while allowing compatible economic activity.

Public comment on the draft will run through January 9, 2015. More information is available at the official website for the DRECP: <www.drecp.org>

Court holds Governor is not a public agency under CEQA

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In this case, the Third Appellate District concluded that the Governor, as an individual, is not a “public agency” for the purposes of CEQA. Therefore, the Governor’s act of concurring with the Secretary of the Interior’s findings under the Indian Gaming Regulatory Act is not a project subject to state environmental review. Picayune Rancheria of Chukchansi Indians v. Brown (Sept. 24, 2014) Case No. C074506.

The Indian Gaming Regulatory Act generally prohibits casino gambling on tribal lands acquired by the Secretary of the Interior after 1988. But the law identifies exceptions to this general prohibition. One exception requires the Secretary of the Interior to reach a determination that siting a gambling establishment on newly acquired lands would not be detrimental to the surrounding community. The governor of the applicable state must concur with the determination. In 2011, the Secretary of the Interior made this determination for a gambling establishment proposed by the North Fork Rancheria of Mono Indians (North Fork Tribe) on newly acquired land in Madera County, adjacent to SR 99. Governor Brown issued his concurrence on August 30, 2012, without preparing or considering whether to prepare an EIR.

The Picayune Tribe filed a petition seeking a writ of mandate ordering the Governor to set aside his concurrence and comply with CEQA. The Tribe argued that the Governor’s act of issuing his concurrence was equivalent to the approval of a project under CEQA. The Governor demurred, arguing that the Governor is not a “public agency” for CEQA purposes. The trial court sustained the demurrers without leave to amend, and the Picayune Tribe appealed.

The appellate court agreed with the trial court, citing the CEQA statute and the Supreme Court’s decision in Muzzy Ranch Co. v. Solano County Airport Land Use Com. (2007) 41 Cal.4th 372. In Muzzy Ranch Co., the Supreme Court stated that the CEQA process ensures that public agencies make informed decisions with environmental considerations. CEQA defines public agencies as including any state agency, board, or commission, or any local government or other political subdivision. The court noted that the list described in section 21063 is limited to governmental bodies. The governor, in contrast, is a governmental official. Additionally, the Indian Gaming Regulatory Act grants the authority to issue the concurrence to the governor of the relevant state. Therefore, in this case, Governor Brown acted and issued the concurrence as an individual. Since the Governor was acting in his capacity as chief executive officer of the State, he was not required to comply with CEQA before issuing his concurrence.

This case establishes that the Governor, when acting as an individual, is exempt from CEQA. The case touched on the issue of whether the Office of the Governor is subject to CEQA, but did not reach an answer. In this case, the federal act explicitly vested concurrence authority in the governor, as chief executive officer of the state.

Third Appellate District requires preparation of an EIR for approval of a tentative subdivision map

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Rominger v. County of Colusa (Sept. 9, 2014), Case No. C073815

This case originates from an application for approval of a tentative subdivision map filed with the County of Colusa. The application proposed dividing four existing parcels into 16 parcels. The proposed parcels ranged in size from about 1 acre to 30 acres. The existing site consisted of agricultural use and light industrial uses related to agriculture. The application indicated no specific plans for expansion were available, and the present intention for the parcels was for their existing uses to continue.

The County prepared an initial study in June 2010 to determine if approval of the proposed tentative subdivision map could have significant environmental impacts. The initial study identified potentially significant impacts to cultural resources but determined these impacts could be mitigated to less-than-significant. Therefore, the County proposed adoption of a mitigated negative declaration for the project.

During the public comment period on the MND, the Romingers submitted comments suggesting an EIR was necessary for a variety of reasons. As a result of these comments, the County determined a water supply assessment was needed and cancelled the public hearing on the MND. Thereafter, a revised initial study was completed in August 2011. The revised initial study concluded that the project could potentially have significant impacts on air quality, cultural resources, and hydrology/water quality. Again, the initial study determined these impacts could be mitigated to less-than-significant and that an MND would be appropriate. The Romingers renewed their complaints during the public comment period for the updated MND. The County approved the MND in spite of these objections, and the Romingers filed a petition for writ of mandate asserting that an EIR was necessary. The trial court rejected the petition, concluding that approval of the tentative map was not a “project” for the purposes of CEQA. The Romingers appealed.

The Appellate Court’s Decision

On appeal, the Romingers argued that the County was barred from asserting that the proposed subdivision was not a CEQA project or that the project was exempt from CEQA based on the common sense exemption. The Romingers reasoned that the County could not make these arguments because the County treated the proposed subdivision as a CEQA project at the administrative level and approved an MND. The appellate court did not find this reasoning persuasive. The court’s task under CEQA is to review agency actions for compliance with procedures required by law. The County reasoned preparation of the MND was entirely voluntary and not required by law in the first place. Therefore, it would be a waste of judicial resources to review the adequacy of the voluntarily prepared MND. The appellate court agreed and allowed the County to argue no environmental review was required in the first place. However, the court disagreed with the County that approval of the tentative subdivision map was not a project under CEQA. Public Resources code section 21080 specifically provides that an approval of a tentative subdivision map is a project subject to CEQA.

The appellate court also concluded that the “common sense” exemption did not apply to the County’s approval. The County argued the map approval, in this specific case, fell within CEQA’s common sense exemption in the CEQA Guidelines section 15061(b)(3). The County reasoned that the action only established new parcel lines and that there was no possible effect on the environment as a result. But the appellate court noted that, in the application, the real parties stated the objective for the subdivision was to facilitate “future expansion where separate financing may be needed.” Therefore, the record demonstrated the purpose of the subdivision was to make development on the parcels easier. Under the common sense exemption, the agency must show, based on evidence in the record, that there is no possibility that the action may result in a significant effect on the environment. Here, the reasonable possibility that creation of smaller parcels could lead to development that might not otherwise occur pushed the project beyond the confines of the common sense exemption.

On the specific challenges to the MND, the appellate court sided with the project opponents on only a single issue. The appellate court determined substantial evidence in the record supported a fair argument that the project may have significant traffic impacts. In this case, a traffic engineer submitted a comment letter suggesting the County relied on unrealistically low trip generation estimates. This comment letter cited specific evidence, such as the proximity of a major interstate, and the potential for the light-industrial uses to be redeveloped as more traffic-intensive uses. In light of this, and other evidence, the traffic engineer suggested that the County should use the general trip generation characteristics from categories in the authoritative trip generation source reference Trip Generation, 8th Edition. Based on these trip generation numbers, the project could potentially have a significant traffic impact on an intersection of a county road and State Highway 99. This evidence in the record supported the fair argument made by the Romingers. In protest, the County pointed to substantial evidence supporting a contrary conclusion. But the appellate court explained that pointing to contrary evidence was insufficient to defeat the fair argument. Therefore, the appellate court concluded that the county prejudicially abused its discretion when it failed to prepare an EIR addressing the potentially significant traffic impact.

Also of note, the appellate court concluded that the County did not entirely comply with the requirement to provide a full 30-day review period for the MND. The Romingers complained that the review period was only 29 days long. But the appellate court reviewed the record and determined that this error did not preclude informed decisionmaking or informed public participation. Since the error was not prejudicial, the error could not provide a basis for relief.

Conclusions and Analysis

The opinion adds to the litany of cases which accept a broad definition of “project” for the purposes of CEQA. This is especially true where the statute explicitly identifies the action as an example of a project. The opinion treads over fresher ground in CEQA law where the appellate court approaches the fair argument standard in a detailed and thoughtful manner. The opinion recognizes that the fair argument must be supported by substantial evidence in the record. The court rejects numerous attacks on the MND in this case where the arguments constituted vague criticisms unsupported by any specific facts. At the same time, the opinion demonstrates the perils of relying on a negative declaration. Because the petitioners supported a fair argument that the project may have a significant traffic impact, the County will be required to prepare an EIR analyzing the traffic impact.

Governor signs three CEQA bills, vetoes one

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Governor Jerry Brown announced this week that he signed the following CEQA-related bills:

AB 52: Assemblymember Mike Gatto (D-Los Angeles)—Native Americans

This bill specifies that a project with an effect that may cause a substantial adverse change in the significance of a tribal cultural resource is a project that may have a significant effect on the environment. The bill requires a lead agency to begin consultation with a California Native American tribe that is traditionally and culturally affiliated with the geographic area of the proposed project, if requested to do so, prior to determining whether a negative declaration, mitigated negative declaration, or EIR is required for a project.

The bill provides examples of mitigation measures that may be considered to avoid or minimize impacts on tribal cultural resources. These provisions apply to projects that have a notice of preparation or a notice of negative declaration filed or mitigated negative declaration on or after July 1, 2015. The bill requires the Office of Planning and Research to revise on or before July 1, 2016, the guidelines to separate the consideration of tribal cultural resources from that for paleontological resources and add consideration of tribal cultural resources.

This bill also requires the Native American Heritage Commission to provide each California Native American tribe on or before July 1, 2016, with a list of all public agencies that may be a lead agency within the geographic area in which the tribe is traditionally and culturally affiliated, the contact information of those agencies, and information on how the tribe may request those public agencies notify the tribe of projects within the jurisdiction of those public agencies for the purposes of requesting consultation.

AB 1104: Assemblymember Rudy Salas (D-Bakersfield)—Exemption for Biogas Pipeline

CEQA provides exemptions from its requirements for certain projects, including for a project that consists of the inspection, maintenance, repair, restoration, reconditioning, relocation, replacement, or removal of an existing pipeline, if specified conditions are met. (Pub. Resources Code, § 21080.23, subd. (a).)

This bill provides that, for purposes of that exemption, until January 1, 2018, “pipeline” also means a pipeline located in Fresno, Kern, Kings, or Tulare County, that is used to transport biogas, as the bill defines that term, and that meets the existing requirements for the exemption and all local, state, and federal laws. The bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Fresno, Kern, Kings, and Tulare.

SB 674: Senator Ellen Corbett (D-Hayward)—Exemption for residential infill projects

CEQA exempts from its requirements residential infill projects meeting specified criteria, including, among other things, that a community-level environmental review was adopted or certified within five years of the date that the application for the project is deemed complete and the project promotes higher density infill housing. For the purposes of this exemption, CEQA defines “residential” to include a use consisting of residential units and primarily neighborhood-serving goods, services, or retail uses that do not exceed 15% of the total floor area of the project.

This bill instead exempts as “residential” a use consisting of residential units and primarily neighborhood-serving goods, services, or retail uses that do not exceed 25% of the total building square footage of the project.

 

Vetoed—AB 543

Governor Brown also vetoed one CEQA-related bill, AB 543, which would have required the Office of Planning and Research to prepare and develop recommended amendments to the CEQA Guidelines that would establish criteria for a lead agency to assess the need for translating certain notices into non-English languages. The governor stated that existing federal and state laws already provide guidance to lead agencies regarding the circumstances which give rise to the need for translating public documents. “Translating public notices and other important information is often good practice,” Governor Brown noted. “In fact Title VI of the Civil Rights Act of 1964 and Government Code Section 11135 require lead agencies to do just that. The High Speed Rail Project and the Bay Delta Conservation Plan are examples of projects where the lead agency determined that translation of environmental review documents was merited.” The bill was presented by Assemblymember Nora Campos (D-San Jose).

USFW determines Valley Elderberry Longhorn Beetle will remain listed as “threatened” under the ESA

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A native subspecies of longhorn beetle will remain listed as “threatened” under the Federal Endangered Species Act. The U.S. Fish & Wildlife Service determined that the best currently available information does not support delisting the Valley Elderberry Longhorn Beetle (VELB). This decision was published in the Federal Register on September 17, 2014.

The continuing listed status of the VELB means issues related to the beetle will need to be considered in project planning and CEQA analysis. Since VELB are highly reliant on elderberry bushes, project mitigation for the beetle often involves avoiding destruction of or replacing impacted elderberry bushes. Of note though, the Service determined the geographic range of the species does not extend into Kings, Kern, and Tulare Counties.

If new information becomes available that indicates the VELB no longer needs protection under the ESA, the Service will again consider delisting. Until then, watch those elderberry bushes during project planning.

The U.S. Fish & Wildlife Service’s official press release can be found here: http://www.fws.gov/sacramento/outreach/2014/09-16/outreach_newsroom_2014-09-16.htm

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