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Second Appellate District clarifies facts and reaches different outcome than in prior published opinion, striking down a condition requiring a public access easement for a coastal development permit

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On rehearing, the Second Appellate District determined a public access easement required in a coastal development permit was an unconstitutional exaction based on the facts in the case Bowman v. California Coastal Commission, Case No. B243015 (Oct. 23, 2014). An earlier blog post describing the court’s original published opinion and the underlying facts of the case can be found here.

In short, Walton Emmick purchased approximately 400 acres of land in San Luis Obispo County that contained a single, uninhabitable residence and a barn in a state of disrepair. In 2002, Emmick applied to the County for a coastal development permit (CDP) to connect an existing well to the house. Emmick also received over-the-counter permits authorizing dry-rot removal and repairs to the roof and deck. Significantly, the County Code exempts repair and maintenance activities “that do not result in any change to the approved land use of the site or building…” from CDP requirements. Emmick began work pursuant to the over-the-counter construction permits but did not begin any of the work under the CDP.

As explained in the prior opinion, the original CPD included a condition imposing a lateral easement for public access along the shorefront portion of the property. No appeal to this condition was filed. Later, however, the County rescinded the first CDP and issued a second CDP that removed the condition imposing the easement. Environmental groups and two coastal commissioners appealed the second CDP to the California Coastal Commission, and the Commission accepted jurisdiction. After hearing, the Commission determined that the easement condition contained in the original CDP was permanent and binding on the landowner, and removal of the easement condition would violate the policy favoring public access to coastal resources. The Commission conditioned its permits on the implementation of the easement contained in the County’s original CDP.

Emmick’s estate filed a petition for an administrative writ of mandate to eliminate the public access condition from the CDP. The estate argued that the access easement condition constitutes an unlawful exaction of its property under the Fifth Amendment.

In its original opinion, the Court of Appeal denied the petition. The court determined that the estate failed to exhaust its administrative remedies because it had not challenged the County’s original CDP imposing the easement condition. Ordinarily, explained the court, the failure to pursue administrative remedies in an administrative mandamus action will bar a party from pursuing a remedy in court under the doctrine of collateral estoppel. In reaching the conclusion that Emmick’s estate had failed to exhaust, the court determined that Emmick had relied on the original CDP to make improvements on the property.

On rehearing, the court emphasized that, in fact, Emmick only completed work pursuant to the over-the-counter permits. Since these improvements were exempt from CDP requirements, the court concluded that Emmick had not relied on the original CDP. In light of these facts, the court concluded the doctrine of collateral estoppel did not support the court barring Emmick’s arguments due to a failure to exhaust administrative remedies.

The court then considered whether the access easement condition violated the Nollan and Dolan regulatory takings test: an argument the court did not previously reach. In this case, the easement lacked the “essential nexus” required by those cases since Emmick never accepted any benefit of the original CDP. Therefore, forcing Emmick to accept the access easement condition would amount to an unconstitutional taking.

This case presents an unusual about-face from an appellate court following a rehearing on a published opinion. The result of the rehearing here emphasizes the importance of the factual record in a mandamus case.

 

Supreme Court Declines Review of High-Speed Rail Bonds Suit

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The California High-Speed Rail project achieved another victory on October 15 when the state Supreme Court declined to hear a suit challenging the issuance of bonds for the rail system’s construction. The Court did not offer explanation for its decision.

A Sacramento Superior Court judge had ruled that the rail’s funding plan was inconsistent with Proposition 1A, the 2008 voter-approved initiative for the project that laid out initial funding, because the plan relied on uncertain future revenue sources. The Third District Court of Appeal disagreed in California High Speed Rail Authority v. Superior Court, and ordered the trial court to enter judgment validating the authorization of the bond issuance for purposes of the proposition.

The project is currently estimated to cost $68 billion. Earlier this year, the project secured future funding whereby it will receive a portion of the state’s cap-and-trade proceeds. Construction of the first rail segment is already underway in Fresno, where crews are demolishing buildings and relocating utilities to make way for the tracks. Opponents continue to challenge the project, but for now, the High-Speed Rail project is chugging ahead.

On Remand, Trial Court Must Consider Whether Federal Mining Law Preempts California’s Moratorium on Suction Dredge Mining

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In the recently published decision of The People v. Rinehart (Oct. 8, 2014) Case No. C074662, the Third District Court of Appeal considered whether criminal enforcement provisions of the Fish and Game Code addressing suction dredge mining are preempted by federal law. Although the court did not conclude that California’s ban on dredge and suction mining is preempted, the court left open the possibility that it is.

Section 5653 of the Fish and Game Code requires those operating vacuum or suction dredge mining equipment to obtain a permit from the California Department of Fish and Wildlife. A permit may be issued if the Department determines the proposed suction dredge mining “will not be deleterious to fish.”

In 2009, the Governor signed Senate Bill 670, prohibiting the Department from issuing new permits under 5653, and imposing a statewide moratorium on instream suction dredge mining until the Department has undertaken the conditions required by Fish and Game Code section 5653.1. Under that provision, the Department must satisfy numerous requirements, including environmental review of the standing 1994 suction dredge mining regulations, before the moratorium is lifted.

This case began when the District Attorney of Plumas County filed a criminal complaint against Defendant Rinehart alleging that he violated Fish and Game Code section 5653 by operating suction dredge mining equipment in waters closed to that type of equipment. Rinehart demurred to the complaint and argued that Fish and Game Code sections 5653 and 5653.1 operated together to create a de facto ban on suction dredge mining in California. Rinehart reasoned that this de facto ban was an unconstitutional interference with his federally-protected mining rights under the Mining Act of 1872. The trial court overruled the demurrer, holding that Fish and Game Codes sections 5653 and 5653.1 were not preempted by federal law. The trial court thereafter convicted Rinehart for possessing and using vacuum and suction dredge equipment without a permit. Rinehart appealed.

The Court of Appeal reversed and remanded the case to the trial court for further consideration of the preemption issue. In an opinion authored by Justice Hull, the court explained the constitutional principles at play, noting that Congress has authority over the regulation of federal lands under the United States Constitution Property Clause. But not all state regulation of federal land is preempted under the Property Clause. States are free to enforce state criminal and civil law on federal lands so long as the state law does not conflict with the “operation or objectives of federal law.” In this case, the Mining Act of 1872 sets forth the federal government’s stance on mining and mineral exploration on federal land. The act encourages surveying and mining for valuable minerals, and if a private citizen perfects a claim in compliance with the act, the claimant secures exclusive right of possession (but not title) and use of the claim.

The Court of Appeal concluded that the factual record before it insufficient to reach a decision. Instead, the court identified two discrete issues for the trial court to address on remand: (1) Does Fish and Game Code section 5653.1 operate to prohibit the issuance of permits required by section 5653; and if so, (2) does this prohibition on dredge mining permits render the defendant’s exercise of federal mining rights impracticable? Although the court remanded the issue to the trial court for further consideration, the decision nevertheless represents a considerable victory for proponents of dredge mining in the state.

Petition for Writ of Certiorari Submitted to the U.S. Supreme Court Contesting the Ninth Circuit’s Decision Upholding USFWS’s Biological Opinion on Delta Smelt

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Under the Endangered Species Act (ESA), if the Secretary of the Interior concludes that a federal agency action will jeopardize a species listed as threatened or endangered, then the Secretary must use the best scientific and commercial data available to identify reasonable and prudent alternatives that are economically and technologically feasible. Petitioners in State Water Contractors v. Jewell presented the U.S. Supreme Court with the following questions related to the Act’s directive: 1) Must the Secretary address in the administrative record the economic and technical feasibility of proposed “reasonable and prudent alternative,” including the effects of the proposed alternatives on third parties? 2) May the Secretary disregard the “best scientific data” on the ground that considering the data would lead to a less “conservative” result, because scientific certainty is impossible, or because the Secretary has considered a range of data in reaching a conclusion?

This case arose after the U.S. Fish and Wildlife Service (FWS) issued a Biological Opinion (BiOp) in 2005 which found that operation of the state’s two largest water projects, the State Water Project and the Central Valley Project, threatened the delta smelt, and thereby curtailed those projects’ operations. The district court found major flaws with the BiOp and ordered FWS to reconsider it, but the Ninth Circuit reversed. The appellate court held that FWS was precluded as a matter of law from considering the economic effects of its proposed restrictions on project operations on Californians. The court also excused FWS’s failure to use the best available scientific data in formulating its opinion. Petitioners argued that the Ninth Circuit’s decision exacerbated the harmful effects of California’s drought, created circuit splits, and contravened the Supreme Court’s precedents.

The BiOp, which the appellate court described as “a big bit of a mess,” concluded that unless the quality and quantity of the delta smelt habitat improved, the smelt would not recover from their downward population trend. The BiOp specified various actions as reasonable and prudent alternatives (RPAs) to the status quo, including limiting the amount of water the projects could pump for certain uses. Petitioners claimed that the amount of water sacrificed to implement the RPAs could have met the needs of over one million households for a year, or irrigated two hundred thousand acres of farmland.

District Court decision

Petitioners brought suit alleging the BiOp violated NEPA, the ESA, and the Administrative Procedure Act. The district court held the BiOp invalid. First, it found FWS had failed to establish that its RPAs met the requirements for a reasonable and prudent alternative under 50 C.F.R. section 402.02, including the requirement that the proposed restrictions be economically and technologically feasible. The court also held that the analyses supporting the specific flow prescriptions set forth in the RPA were fatally flawed and predominantly unsupported, given that 1) FWS failed to use the best available science in calculating flow rates to reduce the number of fish drawn into the pumping stations and 2) the BiOp adopted a flawed methodology to set limits on salinity in the Delta in the autumn of years categorized as above-normal or wet. The court found the agency’s decision “was arbitrary and capricious and ignored the best available science showing that a bias was present.”

Ninth Circuit decision

In a divided panel, the Ninth Circuit reversed. The majority agreed with FWS that the agency was not required to explain why its proposed RPAs met the feasibility standard set forth in the agency’s own regulations. The court also upheld FWS’s decision to use raw salvage data, concluding that normalized data was not tailored to protect the maximum absolute number of individual smelt, as the BiOp’s approach was. The court noted that although ideally FWS would have discussed its reasoning in using that data, the agency’s choice was entitled to deference. One judge sitting by designation from the Eighth Circuit dissented, arguing that because the concerns relating to the RPAs’ feasibility had been raised, FWS was required to at least address those concerns in the BiOp or in the administrative record. The dissent also argued that FWS had failed to use the best available science. The dissent also concluded that the agency’s means of determining where in the Delta the salinity reaches two parts per thousand was arbitrary and capricious, and disagreed with the majority’s decision to ignore the expert witnesses.

Argument for granting the writ

Petitioners described the issues presented as ones of “exceptional national importance.” They argued cert is warranted to resolve a circuit conflict over whether a consulting agency must consider the effects on third parties when proposing reasonable and prudent alternatives to agency action. Furthermore, petitioners noted, whether the ESA requires or precludes an agency from considering the economic impact of its proposed restrictions on agency activity on third parties is a question of recurring importance, given the fact that the federal government conducts thousands of ESA consultations every year. Petitioners argued, that, contrary to the Ninth Circuit’s interpretation, the presence of the feasibility requirement in the definition section of the regulations made the requirement more central to the agency’s obligation of reasoned explanation than it would if the requirement appeared elsewhere. By failing to consider feasibility, petitioners stated, FWS entirely failed to consider an important aspect of the problem, and therefore acted arbitrarily and capriciously. This would not mean that an RPA requirement authorizes FWS to balance the life of delta smelt against the impact of restrictions on project operations; but in choosing among possible alternatives that would avoid jeopardy, an agency would be required to consider the impact of the various effective alternatives on third parties, “in order to avoid unnecessary harm to humans in the course of protecting plants and animals.”

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>

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