Blog

Sacramento Kings Request CEQA Petitioners Post $100 Million Bond to Cover Potential Lost Revenue

General Posted by   

This week, Sacramento Kings CFO John Reinhart stated in court papers filed by the Kings and the city that even a short delay in the arena construction could result in huge losses for the team. Both parties urged the Sacramento Superior Court to require petitioners who oppose the project to post a hefty bond covering the potential losses.

If the arena does not open by 2017, the NBA has a right to buy back the team and move them out of town—a transfer the team avoided last year when it was purchased by Vivek Ranadive after the league vetoed another group’s attempt to move the Kings to Seattle. The team has already spent $60 million purchasing the Downtown Plaza and paying architect fees.

The NBA’s 2017 buy-back deadline is not the only source of potential loss, however. A delay could push completion of excavation activities into the winter rainy season, which would cause serious problems for the construction timeline. With arena construction delayed, the team would also face increased financing costs, potential NBA penalties, and substantial revenue losses.

The bond request comes after a group of petitioners filed a CEQA lawsuit seeking to enjoin the $477 million project.  In total, two groups have filed CEQA lawsuits against the city. The hearing on the injunction request is set for July 25. The Kings request that the petitioners post a $100 million bond, and the city requests an additional $5.7 million bond to cover its own investments.

The bond request was reported by the Sacramento Bee. Click here for the full article.

Fifth District Holds Interim Renewal Contracts for Central Valley Project Water are Exempt from CEQA

General Posted by   

Even though the renewal contracts have expired, and thus the case was moot, the Court of Appeal nevertheless resolved the case, finding the renewal contracts both statutorily and categorically exempt from CEQA. In North Coast Rivers Alliance v. Westlands Water District, Case No. F067383 (July 3, 2014), the Fifth District Court of Appeal upheld the Westlands Water District’s interim renewal contracts with the United States Bureau of Reclamation, which continued the existing terms for water delivery from the Central Valley Project (CVP.) The court upheld the District’s findings that the interim contracts fell under the statutory exemption for ongoing pre-CEQA projects as well as the categorical exemption for the continued operation of existing facilities.

Westlands Water District and its related distribution districts serve more than 600,000 acres of farmland in San Joaquin Valley, and have a right to receive over one million acre-feet of water per year from the CVP, due to water service contracts that have been in place with the Bureau of Reclamation since the 1960s. In 2012, the Bureau and the water districts entered into two-year contracts to renew the districts’ contractual rights to receive CVP water, during which time the Bureau was set to complete the environmental review required for 25-year renewal contracts.

The water districts found that the renewals were statutorily and categorically exempt from CEQA because they involved ongoing receipt and delivery of water on identical terms as the prior water service contracts, with no expansion of service and no new facilities, and any changes related solely to minor administrative matters.

The court first rejected the water districts’ assertion that the renewal contracts were statutorily exempt under the statutory exemption for rate-setting activities under Public Resources Code section 21080, subdivision (b)(8). The court found no evidence that the renewal contracts involved any rate-setting activity.

But the court did uphold the water districts’ conclusion that the renewal contracts were statutorily exempt as ongoing projects approved before CEQA was enacted. (See CEQA Guidelines, § 15261 subd. (a).) The court found that the original contracts and construction of facilities predated CEQA’s enactment in November of 1970. Any assignment agreements and renewals entered into after CEQA’s enactment, the court found, did not result in an expansion or material modification of the underlying activity that was initially approved; rather, the agreements merely facilitated the districts’ ability to receive a stable and adequate water supply within the scope of the original project.

The court found that the renewal projects also came within the categorical exemption for operation of existing facilities. (CEQA Guidelines, § 15301.) Categorical exemptions, unlike statutory exemptions, are subject to exceptions. While the courts of appeal disagree on whether a fair argument standard or substantial evidence standard applies to exceptions, the court here found the disagreement irrelevant because it would reach the same conclusion under either standard.

Petitioners first argued that “unusual circumstances” exception applied. The court, however, agreed with the water districts that the project did not involve unusual circumstances because it was not uncommon for utility-type public agencies to have large-scale facilities operating at a large volume and to impact the environment to some extent simply by existing and functioning as utilities. The court noted that even if the large scale of the water diversion at issue constituted unusual circumstances, as petitioners argued, petitioners would still have to establish that there was a reasonable possibility the activity will have a significant effect on the environment due to such circumstances. Using the established levels of operations as the baseline, the court concluded there was insufficient evidence that there would be a substantial adverse change from the environmental baseline, and thus the exception did not apply. The court also rejected petitioners claim that the renewal contracts fell within cumulative impacts exception to the exemption. The court stated that the present litigation was not the proper time for petitioners to raise the cumulative-impact claim because the short-term interim renewal contracts did not constitute “successive projects of the same type” and therefore did not fit within the definition of the exception.

First District Upholds EIR for Project to Redevelop Former Naval Station on Treasure and Yerba Buena Islands

General Posted by   

In a decision published July 7, 2014, the First District Court of Appeal upheld the EIR for a project designed to transform a former naval station on San Francisco’s Treasure Island into a vibrant mixed-use community. The project is a comprehensive plan to redevelop Naval Station Treasure Island, which ceased operations in 1997.  The project will be constructed over 15 to 20 years. It includes up to 8,000 new homes (with at least 25 percent designated as affordable units available at below-market prices); 500 hotel rooms; commercial, retail, and office space; and 300 acres of parks, playgrounds, and open space. The project also includes restoration and re-use of historic buildings, public utilities, bike and transit facilities, updated infrastructure, and a new Ferry Terminal and intermodal Transit Hub. Because the project will be built over time, with changing market conditions, it includes flexible parameters for certain project elements. All told, the project is expected to cost around $1.5 billion.

The City and County of San Francisco, along with the Treasure Island Development Authority, certified the EIR for the Treasure Island / Yerba Buena Island Project in June 2011. A group called Citizens for a Sustainable Treasure Island challenged the decision, claiming the environmental documents violated CEQA on several grounds. The trial court denied the petition in its entirety. On appeal, the First District Court of Appeal affirmed the trial court’s judgment.

The petitioner’s main argument on appeal was that the lead agencies abused their discretion by preparing a “project” EIR instead of a “program” EIR. Essentially, the petitioner argued that the project was too “flexible” and uncertain to support project-level review.  The court disagreed, noting that the question under CEQA case law is not whether a particular type of EIR is prepared, but rather whether the EIR meets CEQA’s mandate to adequately identify and address the environmental impacts of a project.

The court also upheld the EIR’s project description, analyses of hazardous substances and historic resources, and its discussion regarding conformity with the “Tidelands Trust.” In addition, the court held that the draft EIR did not need to be recirculated.

RMM partners Whit Manley and Chip Wilkins, along with associates Jennifer Holman and Jeannie Lee, represented Real Party in Interest Treasure Island Community Development, LLC, in the case. (Citizens for a Sustainable Treasure Island v. City and County of San Francisco, Case No. A137828, can be read here.)

U.S. Supreme Court Does Not Take Up Constitutionality of California’s Low Carbon Fuel Standard

General Posted by   

The Supreme Court denied a petition for review in Rocky Mountain Farmers Union v. Corey, letting stand the Ninth Circuit’s holding that the state’s low carbon fuel standard (LCFS) is constitutional on its face. RMM previously wrote about the Ninth Circuit decision here. The issue before the court was whether the LCFS discriminates against out-of-state businesses, thereby violating the dormant commerce clause. The court held that the LCFS is neither facially discriminatory nor discriminatory in purpose or effect with respect to the regulation’s crude oil provisions.

On remand, the district court will be tasked with determining whether the regulation’s ethanol provisions place burdens on interstate commerce that outweigh the benefits, rendering the LCFS invalid, and also whether the Clean Air Act preempts the LCFS program.

Court of Appeal Upholds State Water Board’s Broad Authority to Prohibit Unreasonable Use of Water

General Posted by   

The court held that the State Water Resources Control Board has broad regulatory authority to prevent the unreasonable use of water, upholding a Board regulation that prohibits certain diversions by grape growers in the Russian River watershed. The First District Court of Appeal issued a partially published opinion in Light v. State Water Resources Control Board (2014) __Cal.App.4th __ (Case No. A138440) on June 16, 2014.

In April 2008, young salmon were found to have been fatally stranded along the banks of the Russian River stream system. Scientists from the National Marine Fisheries Service concluded the deaths were caused by abrupt declines in water level that occurred when water was drained from the streams and sprayed on vineyards and orchards to prevent frost damage, a common practice in the watershed.

Following a series of hearings and the preparation of an EIR, the Board adopted Regulation 862 in September 2011. Regulation 862 is likely to require a reduction in diversion of water from the stream system for frost protection, at least under certain circumstances. It applies to “any diversion of water from the Russian River stream system … for purposes of frost protection from March 15 through May 15.” The regulation itself contains no substantive regulation of water use, instead delegating the task of formulating regulatory programs to “water demand management programs” (WDMPs), which will be created by self-organized groups of agricultural diverters who will act as the “governing bodies.” Each WDMP must be submitted annually to the Board for approval. The regulation declares that any water use inconsistent with the programs, once they have been formulated and approved by the Board, is unreasonable, and therefore prohibited.

Regulation 862 was challenged in two petitions for writ of mandate. The petitions alleged that the Board lacked regulatory authority to adopt the regulation and that the regulation would unlawfully interfere with plaintiffs’ use of water drawn from the Russian River stream system. The trial court granted a writ invalidating the regulation on several grounds. The Board appealed. The Court of Appeal reversed.

The Court of Appeal first addressed plaintiffs’ argument that Regulation 862 was invalid because the Board lacked sufficient regulatory authority to adopt the regulation. Plaintiffs argued that the Board lacked authority to adopt the regulation because, according to them, the Boards’ authority to regulate the unreasonable use of water was limited to enforcement actions. The Court of Appeal disagreed, finding that the Board may exercise its regulatory powers through the enactment of regulations, as well as through the pursuit of judicial and quasi-judicial proceedings. The court noted that the Board is charged with acting to prevent unreasonable and wasteful uses of water, regardless of the claim of right under which the water is diverted, and that the Board’s authority to enact regulations in furtherance of this purpose was addressed and upheld nearly 40 years ago in People ex rel. State Water Resources Control Bd. v. Forni (1976) 54 Cal.App.3d 743. The court concluded that, given the Board’s statutory charge to “prevent waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in this state” and the recognized power of the Legislature to pass legislation regulating reasonable uses of water, the Board’s grant of authority to “exercise the … regulatory functions of the state” necessarily includes the power to enact regulations governing the reasonable use of water.

The Court of Appeal next addressed Plaintiffs’ contention that the Board lacks regulatory authority to limit water use by riparian users and early (pre-1914) appropriators, whose diversion is beyond the permitting authority of the Board. Rejecting this argument, the court explained that, although the Board has no authority to require such users to obtain a permit to divert, that does not mean their use of California’s water is free from Board regulation. Preventing these users from the unreasonable use of water necessarily requires the imposition of limits on that use by the Board. The Court explained that there is “no question” the Board has the power to prevent riparian users and early appropriators from using water in an unreasonable manner.

The court also determined that the regulation did not violate the rule of priority. When the supply of water is insufficient to satisfy all persons and entities holding water rights, it is ordinarily the function of the rule of priority to determine the degree to which any particular use must be curtailed. Yet, as the court explained, even in these circumstances, the Board has the ultimate authority to allocate water in a manner inconsistent with the rule of priority, when doing so is necessary to prevent the unreasonable use of water. Because no one can have a protectable interest in the unreasonable use of water, when the rule of priority clashes with the rule against unreasonable use of water, the latter must prevail. The court was careful to point out that since this was a facial challenge, its holding extended only to whether the regulation was valid on its face. It explained that the regulation does not declare any specific diversion of water for frost protection unreasonable, much less all such use. Rather, frost protection diversion is unreasonable only when it occurs in violation of the WDMP. As among individual water rights holders, the regulation requires the WDMP’s to respect the rule of priority in assigning corrective actions. Thus, a determination of whether specific regulatory measures adopted by the WDMP’s violate the rule of priority, must await implementation of the regulation.

The court also concluded that the Board properly found the regulation to be necessary to enforce water use statutes and did not unlawfully delegate its authority by requiring local governing bodies to formulate the substantive regulations.

Lastly, in an unpublished portion of the opinion, the court upheld the Board’s certification of the EIR for the regulation.

 

 

Court Holds Petition Over Tree Removal in Community College Expansion Project Came Too Late

General Posted by   

A published opinion by the First District Court of Appeal emphasizes the importance of filing timely CEQA lawsuits. In Citizens for a Green San Mateo v. San Mateo Community College District, the court determined that, even under the most generous interpretation of CEQA’s statute of limitations, a petitioner’s lawsuit was time-barred under Public Resources Code section 21167.

The controversy arose when the San Mateo Community College District removed and pruned over 200 invasive eucalyptus trees on the northern edge of the community college campus. The district began removing trees on December 28, 2010. On January 5, 2011, a member of Citizens for a Green San Mateo contacted the district expressing concern over the tree removal and pruning. Citizens for a Green San Mateo filed a petition for writ of mandate on July 1, 2011, alleging that the district violated CEQA and was required to prepare an EIR to study the tree removal. The trial court determined the challenge was timely and granted the petition, finding the district had violated CEQA. The district appealed.

The Appellate Court’s Decision

On appeal, the district argued the 30-day statute of limitations period established by Public Resources Code section 21167, subdivisions (b) or (e) applied to bar the CEQA lawsuit because the district filed a Notice of Determination. The NOD described the mitigated negative declaration prepared by the district when it approved the Facility Improvements at College of San Mateo project, or the “CSM Project,” in 2007.

The CSM Project included renovation, demolition, replacement, or new construction of about 25 buildings, numerous pedestrian and automobile circulation enhancements, and other improvements to modernize the campus. The negative declaration also determined that the proposed project would result in the removal and pruning of an unknown number of trees, but tree plantings proposed as part of the project would mitigate any unavoidable tree removal, resulting in a less than significant impact. At the hearing, a district trustee expressed concern regarding campus-wide tree removal proposed as part of the CSM Project, but noted that, due to the mitigation required by the negative declaration, “the number of newly planted trees will be greater than that of removed trees.” No public comments were offered at the hearing.

The appellate court rejected the petitioner’s claim that the tree removal was “materially different” from the activities discussed in the mitigated negative declaration and subsequent NOD that the community college district filed for the CSM Project. The court emphasized that the term “project,” for the purposes of CEQA, does not mean each separate governmental approval that may ultimately be required to complete the proposed action. The court concluded that the record demonstrated the tree removal was a subsequent activity encompassed within the scope of the CSM Project. Since the district filed an NOD recording its approval of the CSM Project, and the public was on notice that trees could be removed anywhere on campus as a result of the CSM Project, the 30-day statute of limitations established by section 21167, subdivisions (b) and (e) applied to bar the lawsuit.

Even if the 180-day limitations period, which applies when no NOD is filed, applied to this case, the appellate court determined the lawsuit was still time-barred. Assuming, for the purposes of analysis, that the district failed to adequately notify the public of the tree removal, any challenge would need to be filed within 180 days from the date of the district’s decision to carry out or approve the project, according to section 21167, subdivision (a). Here, the district committed to the tree removal at the public trustee meeting on November 17, 2010. The appellate court emphasized that section 21167, subdivision (a), does not require any special notice requirement to start the 180-day clock; all that is required is a formal decision by a public agency to carry out or approve the project. Therefore, the petition was time-barred, even assuming the tree removal was not described in the mitigated negative declaration certified for the CSM Project.

Finally, the appellate court was not persuaded by the efforts of Citizens for a Green San Mateo to avoid the result of filing its complaint outside CEQA’s statute of limitations. Citizens asserted it had no notice of the potential for tree removal activities until a neighbor/member observed the trees being cut down on January 5, 2011. To support this argument, the citizens cited the California Supreme Court’s opinion in Concerned Citizens of Costa Mesa, Inc. v. 32nd District Agricultural Association (1986) 42 Cal.3d 929. But the appellate court noted that the citizens interpreted the test established in that case incorrectly. In Concerned Citizens, the agency approved a fairground on six acres that would have seated 5,000. As constructed, the theater actually seated 7,000 across 10 acres, so the project constructed was materially different than the project the agency initially approved. Further, the agency never alerted the public to these changes. Therefore, the Supreme Court determined the 180-day statute of limitations ran from when the public reasonably should have known the project being constructed was different than the project approved. In contrast, the mitigated negative declaration prepared by the community college district notified the public that the district intended extensive landscaping improvements across campus that could require the removal of mature trees. Further, the tree removal activities conducted were not materially different from those approved by the district at an open hearing in November 2010. So even under the most generous interpretation of section 21167 and the case law established by the Supreme Court, Citizens for a Green San Mateo’s petition was time-barred.

RMM partners James Moose and Sabrina Teller represented the San Mateo Community College District.

President Obama Signs the Water Resources Reform and Development Act

General Posted by   

On June 11, 2014, President Obama signed the Water Resources Reform and Development Act (WRRDA). Historically, water resources legislation has been enacted every two years to provide policy direction to the Army Corps of Engineers (Corps) and the Administration. The WRRDA is the first water resources bill that has been signed since 2007, however.

The WRRDA authorizes 34 federal, state, and local projects aimed at maintaining the nation’s ports, levees, dams, and harbors. For example, the WRRDA authorizes projects to deepen the Boston Harbor and the Port of Savannah, to restore the Everglades, and to strengthen levees in the Sacramento region. The Congressional Budget Office estimates the total cost to implement these projects will be $12.3 billion between 2014 and 2025. This cost will be offset by $18 billion in project deauthorizations contained in the WRRDA.

Some key components of the WRRDA:

  • Authorizes approximately $45 million for flood risk management measures for the Orestimba Creek in the San Joaquin River Basin to protect the City of Newman.
  • Authorizes approximately $689 million for flood risk management measures in the Sutter River Basin.
  • Allows local communities, which may have state or local funding sources, to carry out work in advance of the Corps and receive a credit for this work.
  • Requires the Corps to set firm deadlines for preparing its studies.
  • Expedites project permitting and approvals by reducing the number of studies to be performed by the Corps.
  • Requires the Corps to allow for regional variances regarding vegetation patterns and characteristics on levees, among other variances, with feedback from state, regional, and local entities.
  • Authorizes financial assistance through the Water Infrastructure Finance and Innovation Act of 2014 to carry out pilot projects by public or private entities for flood damage reduction, hurricane and storm damage reduction, environmental restoration, coastal or inland harbor navigation improvement, or inland and intracoastal waterways navigation improvement.
  • Deauthorizes $12 billion for old, inactive port projects.
  • Reforms and preserves the Inland Waterways Trust Fund, which is used to fund the construction and rehabilitation of the nation’s inland waterways system.

In addition to the aforementioned projects, the WRRDA authorizes construction activities to strengthen 24 miles of levees protecting over 100,000 residents and $7 billion in property in the Natomas area, north of downtown Sacramento. Federal maps show that a levee breach could put homes and businesses in the area under 20 feet of water. In 2012, the Sacramento Area Flood Control Agency finished upgrading 18 miles of Natomas levees. The WRRDA authorizes the Corps to complete upgrades to the remaining 24 miles of levees, which had been stalled because of the lack of federal authorization.

Read the full text of the WRRDA here.

Appellate Court Upholds Permit for Landfill Expansion in Solano County

General Posted by   

After years of environmental review and litigation, the First District Court of Appeal upheld permits authorizing the expansion of a landfill in Solano County. Waste Connections, Inc., has sought for more than a decade to expand the Potrero Hills Landfill, which is in an upland “secondary management area” of Suisun Marsh. In SPRAWLDEF v. San Francisco Bay Conservation and Development Commission, ___Cal.App.___, an environmental group challenged the San Francisco Bay Conservation and Development Commission’s approval of the permits, arguing that the commission should have approved a smaller expansion that would not affect a marsh watercourse. The court disagreed. Applying CEQA case law to the county ordinance at issue, the court held that substantial evidence in the record supported the commission’s determination that smaller alternatives were not economically reasonable.

Solano County Ordinance, section 31-300, allows modification of a marsh watercourse only if no “reasonable alternative” exists. The commission determined that a smaller expansion alternative, designed to avoid encroaching on the intermittent watercourse, would not be economically realistic. The trial court agreed with the petitioner, Sustainability, Parks, Recycling and Wildlife Legal Defense Fund (SPRAWLDEF), that no substantial evidence supported the commission’s determination. The Court of Appeal reversed.

In evaluating whether the commission had substantial evidence for its decision, the court applied CEQA principles. The court noted that, under CEQA, governments must choose “feasible” alternatives and “feasible” mitigation measures to lessen the significant environmental impacts of projects. Employing CEQA’s definition of “feasible” and CEQA case law concerning economic infeasibility, the court concluded that CEQA’s definition of economic “feasibility” embraces the concept of reasonableness. From there, the court engaged in an extensive discussion of CEQA case law.

The court distinguished this case from CEQA cases where a determination of economic infeasibility was legally inadequate. In those cases, meaningful comparison of the proposal and the alternatives was not possible because there was no evidence regarding the cost of the alternatives. Here, the court focused on the commission’s ability to compare the costs of the proposed expansion with that of the alternatives. Waste Connections, Inc. the landfill operator, explained its profit margins and advised the commission that the economic consequences of the alternatives would be so great that the project would not be “financially viable.” It submitted data for both the proposed expansion and the alternatives, comparing the per unit cost, capacity, and the life of the landfill for each. Thus, according to the court, the commission had an “adequate record before it to fairly determine the smaller alternatives were not economically reasonable.”

The court stated that there was “no merit” to SPRAWLDEF’s assertion that the economic information regarding the costs of the proposal and alternatives should be discounted or ignored because it was provided by the real party in interest, Waste Connections, and that it was within the province of the commission to find the information credible and accept it as accurate and relevant. The court determined that this data provided the commission with “some context” to assess the economic feasibility of the alternatives and held that there was substantial evidence to support the commission’s determination that the smaller alternatives were not economically feasible.

Energy Information Administration (EIA) Reduces Its Estimates of Recoverable Oil in the Monterey Shale to 600 Million Barrels, down 96% from 2012 Estimates

General Posted by   

At the May 21, 2014 Oil & Gas Strategies Summit in New York, EIA Administrator Adam Sieminski shocked many with his announcement that the federal agency has drastically cut its estimates of technically recoverable oil in the Monterey Shale from 13.7 billion barrels to 600 million barrels. According to Sieminski’s reported comments, the revision was prompted, in part, by new evidence the EIA and U.S. Geological Survey collected on output from wells where new techniques have been tested.

In 2011, the EIA published a report by INTEK Inc. that estimated there were 15.4 billion barrels of technically recoverable shale oil, or “tight oil” in the Monterey Formation.   Sometime in 2012, the EIA reduced this estimate to 13.7 billion barrels.  Now, the agency plans to release a report in the coming months that will explain why it has decided to severely reduce the estimate to 600 million barrels.

The Post Carbon Institute’s December 2013 report on the Monterey Shale presaged this news.   The PCI report—“Drilling California: A Reality Check on the Monterey Shale”—provided several reasons why the EIA’s 2011 estimates were likely to be “highly overstated.”  For example, the report asserts that:

  • “Existing fields within the Monterey are areally restricted and are primarily controlled by structural and stratigraphic trapping mechanisms, thus the assumption of broad regions of prospectivity is highly questionable.”
  • “An analysis of every well producing from Monterey shale reservoirs reveals that average initial productivity is less than half of the typical horizontal and vertical shale wells assumed in the EIA/INTEK report, and less than a quarter of the ‘typical Elk Hills vertical shale well’.”
  • “Fracking and acidization have doubtless been tried extensively on Monterey shale wells, yet the data do not show any significant increase in initial well productivity or likely cumulative oil recovery for recent wells.”

(J. David Hughes, PCI Fellow, Drilling California: A Reality Check on the Monterey Shale, at p. 46.)

3435363738