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First District Upholds Tolling Agreement Extending CEQA’s Statute of Limitations

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Salmon Protection and Watershed Network v. County of Marin (1st Dist. April 20, 2012) __Cal.App.4th__ (Case No. CIV1004866)

On April 20, 2012, the First Appellate District affirmed a lower court’s holding that a public agency and a private party may agree to toll the limitations period for challenging the adequacy of an EIR under CEQA.

The project at issue in this litigation was the adoption of the Marin Countywide General Plan Update. Salmon Protection and Watershed Network (SPAWN) filed a petition for writ of mandate challenging certification of an EIR for the plan. In an attempt to reach a settlement, SPAWN and Marin County entered a series of “tolling” agreements.  These agreements extended the 30-day limitation period under Public Resources Code section 21167 for the filing of challenges to EIRs. Settlement discussions were ultimately unsuccessful, and SPAWN proceeded to file a petition to challenge the County’s EIR.

A group of property owners was granted leave to allege that SPAWN’s petition was untimely because CEQA does not permit tolling of the statute of limitations. The trial court sustained demurrers by the County and SPAWN, holding tolling agreements are not prohibited by either CEQA or Government Code section 65009. Instead, the court declared “CEQA encourages parties to avoid litigation through pretrial settlements and negotiated dispositions, which may include the use of tolling agreements.” The interveners appealed.

The Court of Appeal noted the challenge invoked potentially conflicting public policies.  While CEQA favors the prompts disposition of CEQA challenges, there is an equally strong public policy, recognized by the California Supreme Court, encouraging settlement.  The court noted CEQA itself contains provisions encouraging settlement. (See Public Resources Code sections 21167.8, 21167.9, 21167.10) Based on these observations, the court determined tolling agreements promote the public interest by permitting settlement discussions to proceed without the distraction of litigation.

Interestingly, both the County and SPAWN joined in opposition of the interveners’ attack on the tolling agreement. In addition, numerous amicus offered arguments, cited by the court, in support of tolling agreements as commonplace under CEQA.  The court also offered examples of numerous other cases recognizing both the validity and desirability agreements tolling other limitation periods. In addition, the court determined that the limitation period in section 21167 is primarily intended to protect project proponents from extended delay, uncertainty and other disruptions.  Therefore, Civil Code section 3513, which bars contravention by private agreement of laws established for a public purpose, does not prevent tolling agreements under CEQA. Ultimately, the court found both public policy and the law allow for agreements tolling the statute of limitations for filing petition under CEQA.

RMM partner Jim Moose and associates Jennifer Holman and Jeannie Lee represented Marin County in the litigation.

Second District Upholds Agency Use of Projected Future Condition for Environmental Baseline

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Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (2nd Dist. April 17, 2012) __Cal.App.4th__ (Case No. B232655)

On April 17, 2012, the Second Appellate District affirmed a lower court’s denial of a petition for writ of mandate challenging the approval of a light rail project and certification of a final EIR under CEQA. The Second Appellate District disagreed with recent cases from other appellate circuits regarding the use of a projected future baseline and found that the use of a future baseline for analyzing certain impacts is appropriate when supported by substantial evidence.

The project at issue, known as the Exposition Corridor Project Phase 2, is intended to extend high-capacity, high-frequency transit service from downtown Los Angeles to Santa Monica. Exposition Metro Line Construction Authority (Expo Authority) prepared an EIR in which it determined that the current population and traffic levels did not provide a reasonable baseline for determining the significance of traffic and air quality impacts of the project. Instead, Expo Authority used projected conditions in 2030 for the baseline.

Petitioners sued, arguing, among other things, that the Expo Authority’s use of a future baseline was improper.  The trial court denied the petition, and Petitioners appealed.

On appeal, Appellants argued Expo Authority’s use of projected future conditions could not provide the baseline for reviewing the significance of environmental impacts under CEQA, as a matter of law. Citing Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310 (CBE), the court noted “Neither CEQA nor the CEQA Guidelines mandates a uniform, inflexible rule for determination of the existing conditions baseline.” Instead, agencies have discretion to decide exactly how to realistically measure existing physical conditions without the proposed project. The court noted CBE rejected use of present-day hypothetical conditions where those conditions were not a realistic description of the existing conditions. Expo Authority’s use of projected future conditions was distinguishable.

The Court of Appeal determined there was nothing “illusory” about population growth and its inevitable impacts on traffic and air quality.  Therefore, measuring the environmental effects of a long-term project by looking at those effects in the long-term was appropriate for this EIR. In fact, the Court of Appeal stated “In a major infrastructure project…assessment of the significance of environmental effects based on [current] conditions…yields no practical information, and does nothing to promote CEQA’s purpose of informed decisionmaking on a project designed to serve a future population.” Therefore, the court found Expo Authority was not prevented, as a matter of law, from using projected baseline conditions for a long-term project when its approach was supported by substantial evidence.

In reaching this holding, the Court of Appeal expressly disagreed with the holdings of both Sunnyvale West Neighborhood Assn. v. City of Sunnyvale City Council (2010) 190 cal.app.4th 1351, and Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48.

This holding is significant because it creates a stark split in authority between the Appellate Districts. Project applicants should be aware of this split in authority before attempting to rely on projected future conditions for an environmental baseline. There will undoubtedly be a push to take the issue to the California Supreme Court for resolution of the split in authority.

Fish and Wildlife Service Issues New Land-Based Wind Energy Guidelines

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On March 23, 2012, the Department of the Interior released guidelines designed to help wind energy project developers avoid and minimize impacts of land-based wind projects on wildlife and habitat.  These voluntary guidelines were developed to encourage “smart siting, design, and operation” of wind energy projects based on a scientific process for addressing wildlife conservation concerns at all stages of development.  The guidelines are also intended to promote effective communication among wind energy developers and local, state, and federal agencies. When used with appropriate regulatory tools, the guidelines are intended to facilitate a practical approach for conserving species of concern. The new land-based wind energy guidelines were developed through a joint effort by the Department of Interior’s Fish and Wildlife Service and the Wind Turbine Guidelines Advisory Committee. The final guidelines were released after a five year-year process that included approximately 30,000 submitted comments.

The final guidelines rely on a “tiered approach” to assessing potential adverse effects to species of concern and their habitats.  Each tier involves collecting information in increasing detail and quantifying the potential significant adverse impacts on wildlife of proposed wind energy projects.  These risks are evaluated and used to guide siting, construction, and operation decisions.  The Fish and Wildlife Service indicates that many distributed or community facilities will need to proceed only through the initial tiers; not every project will be required to progress through all stages.  This approach is intended to allow efficient use of both developer and wildlife agency resources. The five tiers for identifying and minimizing impacts to species of special concern and their habitat are as follows:

  • Tier 1: Developers complete a preliminary site evaluation. This can help developers identify broad geographic areas of high sensitivity. This stage is intended to offer early guidance about sensitivity of potential sites within a larger landscape context.
  • Tier 2: Developers complete a site-specific characterization. This stage should include communication with relevant agencies and site-specific data gathering, such as site visits by a wildlife biologist.
  • Tier 3: Fields studies are conducted to document site wildlife and habitat and predict potential impacts attributable to the project.  These studies provide pre-construction information that can be used to design appropriate mitigation measures or monitoring studies, among other tools for minimizing potential significant adverse impacts.
  • Tier 4: Developers implement post-construction studies to estimate actual project impacts.  Fatality studies play an important role for data collection at the tier 4 stage.
  • Tier 5: In the event observed fatalities exceed predictions in earlier tiers, if estimated project impacts could lead to local population declines, or mitigation measures were ineffective, tier 5 studies may be required.  The Service expects that tier 5 studies will be complex and time-consuming.  Therefore, the Service anticipates this tiered approach should direct projects away from sites where tier 5 studies would be necessary.

The guidelines will also play an important role in helping developers identify any permits that might be needed to ensure compliance with federal wildlife laws such as the Migratory Bird Treaty Act, the Bald and Golden Eagle Protection Act and the Endangered Species Act.  Voluntary compliance with these guidelines does not provide immunity to any liability for violation of these laws; however, if a violation occurs, the Fish and Wildlife Service will consider a developer’s documented efforts to communicate with the Service and adhere to these guidelines.

A final version of the guidelines are available here: http://www.fws.gov/windenergy/docs/WEG_final.pdf

Fifth District Finds Irrigation District has Standing Under CEQA to Challenge Environmental Review Document

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Consolidated Irrigation District v. City of Selma (5th Dist. Feb. 28, 2012 [modified March 9th, 2012]) __ Cal.App.4th__ (Case No. 08CECG01591)

On February 8, 2012, the Fifth Appellate District ruled that a lower court properly found an irrigation district had standing to sue under CEQA and challenge a residential development approved by the City of Selma. The court also found the administrative record provided substantial evidence supporting a fair argument that the proposed project would result in potentially adverse significant impacts, and therefore, a mitigated negative declaration was inappropriate and a full environmental impact report was required.

Factual and Procedural Background

Raven Development, Inc., proposed developing a 160-unit, single-family residential subdivision that would be annexed by the city. Water for the proposed subdivision would be provided by a private water company. The initial environmental study concluded that the project’s groundwater use would not be significant and would not interfere substantially with the recharge of the aquifer; therefore, no mitigation would be required for the project’s impacts on hydrology and water quality.

Petitioner Consolidated Irrigation District (CID) is an independent special district formed under the California Water Code. The district is located in southern Fresno County, and its boundaries enclose approximately 163,000 acres of land, the majority of which is irrigated agricultural land.  The District delivers over 200,000 acre-feet of surface water for irrigation per year. The District also operates a groundwater recharge system that includes over fifty recharge basins.

An integrated regional water management plan was completed for the Upper Kings groundwater basin. The water management plan included findings that the Kings groundwater basin was in a state of overdraft that would continue to worsen through year 2030 based on projected conditions. The findings noted that between 2005 and 2030, the groundwater levels in the District’s urban areas will decline between an estimated five and ten feet.

The city prepared a mitigated negative declaration for Raven Development’s proposed subdivision. During the public review period, the District submitted letters stating the conversion of agricultural land to urban land was having an adverse and cumulatively significant impact on the groundwater basin, and the project potentially could have cumulative hydrology impacts as well. The District asserted that a full EIR was required. Despite these concerns, the city council adopted resolutions approving the project and adopting the MND.

CID filed a petition alleging that substantial evidence supported a fair argument that the project could result in significant impacts to the environment. CID requested that the city prepare the administrative record.

The city lodged a certified administrative record. Subsequently, CID filed a statement of issues.  This included an allegation that mandatory portions of the administrative record had not been included. CID filed a motion to augment the record, claiming it did not contain four documents that CID had submitted to the city. The trial court ordered that the administrative record be augmented and ultimately found the city violated CEQA when it approved the project. The court determined that the city needed to prepare a full EIR to address the significant cumulative impacts attributable to the project, among other potential impacts. The city appealed.

The Appellate Court’s Decision

On appeal, the city argued the trial court erred when it allowed the challenged documents to be added to the administrative record.  The city asserted the documents were not presented to a city decision-making body, and therefore, were not considered during the project approval process. The city further argued that the trial court erred in determining the district had standing. Finally, the court addressed the fair argument standard as applied to MNDs and issues of credibility of evidence submitted before an agency.

Order Augmenting the Administrative Record

The parties disagreed on the appropriate standard of review to be applied to the trial court’s decision to grant the motion to augment the administrative record. The city asserted de novo review of the trial court’s decision was the appropriate standard. The city argued this review should be limited to an examination of the administrative record. CID disagreed and claimed the only issue was whether the documents had been submitted to a decision-making body prior to the final approval of the project. Therefore, the trial court’s decision to augment the record with the contested documents should be upheld under the substantial evidence standard of review.

The court of appeal noted that the parties briefed the appeal before the court published its decision in Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48, which addressed numerous questions related to the scope of the administrative record. Relying on Madera Oversight, the court determined Public Resources Code section 21167.6, subdivision (e), governing the contents of administrative records, is mandatory, and the requirements thereof are not committed to the discretion of a trial court. Instead, the findings of fact made by the trial court in determining whether documents are part of the record are appropriately reviewed under the substantial evidence standard.

The trial court based its decision to augment the administrative record on conflicting evidence presented by the city and district. Testimony from a district representative indicated that the documents in question had been presented to the city planning commission at a public hearing. The planning commission had failed to maintain two files in its record that it later agreed should have been included. Further, while transcripts were not available for the hearing, minutes indicated that the district submitted three documents. Testimony from the district’s representative indicated that two documents had actually been submitted to the city as a single document. The appellate court determined these facts presented substantial evidence supporting the trial court’s order to grant the motion to augment the record.

Standing of a Public Agency

The city also argued the trial court erred when it determined CID had standing to bring an action under CEQA. The city asserted the water district could not claim public interest standing to bring a citizen suit under CEQA. The city reasoned that a public agency could not qualify for public interest standing because it is a governmental body. The court declined to address this argument after finding the district adequately met the usual “beneficially interested” standing requirement under Code of Civil Procedure section 1086.

The court determined the district was “beneficially interested” after citing Water Code section 22650, which states, “A district may commence and maintain any actions and proceedings to carry out its purposes or protect its interests…”  The court determined “interests” in this section included all beneficial interests sufficient to satisfying standing requirements of Code of Civil Procedure section 1086. As a result, CID had authority under the Water Code to pursue CEQA litigation to protect its beneficial interests.

The court declined to adopt the city’s argument that a public agency only has a special interest or right, and therefore a beneficial interest, if the project affects a natural resource over which the agency has jurisdiction. The city attempted to support its argument by citing to CEQA Guidelines which limit the matters a public agency may comment on during environmental review. The court noted, however, that public agencies are authorized to submit comments to the lead agency on projects with impacts falling outside their legal jurisdiction if an affected resource is within an area of expertise of the agency. Therefore, the court concluded a public agency’s beneficial interests are not limited only to resources over which it has direct jurisdiction.

In this case, the district argued its operations, including that of numerous groundwater recharge basins, would be adversely affected by the project. The court found the operation of these recharge basins gave CID a special interest in the local groundwater. As a result, the district had a beneficial interest that could be adversely affected by the project. Therefore, the district satisfied the standing requirements necessary to file suit to enforce CEQA.

Application of the Fair Argument Standard

An agency’s decision to certify a negative or mitigated negative declaration is reviewed by courts under the fair argument test. If this test is met, then the declaration is overturned and the agency must prepare and certify an environmental impact report. A fair argument that a particular project may have a significant adverse effect on the environment must be supported by substantial evidence in the administrative record. The city argued the lead agency has discretion to determine whether evidence presented is actually substantial. The court disagreed and noted that whether an administrative record contains sufficient evidence to support a fair argument is a question of law.  Instead, the court found deference to the agency appropriate only for limited issues of credibility.

To support rejecting evidence for lack of credibility, an agency must identify that evidence with sufficient particularity to allow a reviewing court to determine if there were actually disputed issues of credibility. The court determined this was an appropriate requirement to prevent post hoc rationalization by the agency. In this case, the city could provide no citations to the administrative record showing any decision-maker questioned the credibility of any evidence presented. Therefore, court declined to defer to the city when reviewing the record to determine if it supported a fair argument that the project would cause significant adverse impacts.

Conclusion

This case further illustrates the difficulty lead agencies can face in defending MNDs. It also indicates that it is important for agencies to identify and discuss the reasons they believe presented evidence may not be credible. If an agency fails to do this, a court is likely to dismiss subsequently presented credibility challenges as simply post hoc rationalization.

In addition, an agency’s beneficial interest in CEQA proceedings extends not only to just the natural resources over which the agency has direct jurisdiction, but also those which have some relation or connection to the jurisdictional resource areas.

U.S. Supreme Court Holds That Property Owners Can Sue to Immediately Challenge Environmental Protection Agency Orders Issued Under the Clean Water Act

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Sackett v. Environmental Protection Agency (March 21, 2012, No. 10–1062) 566 U.S. ____ 

Background

The Sacketts own a 0.63-acre undeveloped parcel near Priest Lake in Idaho. In 2007, they graded and filled a portion of their property as preparation for building a home. Shortly thereafter, EPA officials served the couple with an administrative compliance order advising them that their parcel constituted wetlands subject to federal permit jurisdiction under section 404 of the Clean Water Act.  The order directed the Sacketts to restore the lot to its original condition without delay; and threatened them with substantial fines of up to $75,000 per day for non-compliance with the CWA and administrative order.

The Sacketts sought a meeting with EPA regulators to address their contention that the property was not wetlands subject to the CWA because it was separated from Priest Lake by several lots containing permanent structures. After they were denied the meeting, the Sacketts filed suit in federal district court to challenge the EPA’s wetlands classification. The district court dismissed their lawsuit, holding that EPA administrative compliance orders issued under the CWA do not constitute final agency action subject to judicial review. The Ninth Circuit affirmed and the U.S. Supreme Court granted certiorari. 

Supreme Court’s Decision

The Supreme Court unanimously reversed the decision and held that the administrative compliance order issued by the EPA constituted a “final agency action” subject to judicial review under the APA, and nothing in the CWA explicitly bars such review.

Beginning with the “final agency action” analysis, the Court explained that the APA provides for judicial review of final agency action for which there is no other adequate remedy in a court and the compliance order here had  “all of the hallmarks of finality.” Citing the “final agency action” rules from Bennett v. Spear (1997) 520 U.S. 154, 178, the court found that the EPA “determined” “rights or obligations” through the compliance order by requiring the Sacketts to restore their property according to an agency-approved plan and to give the EPA access.  Also, the order had legal consequences which exposed the Sacketts to double penalties in future enforcement proceedings and severely limited their ability to obtain a permit for their fill from the Army Corps of Engineers.  Further, the Court held, the order’s issuance marked a “consummation” of the agency’s decision-making process because the EPA’s findings in the compliance order were not subject to further agency review. 

The Sacketts also had no other adequate remedy in a court because a civil action brought by the EPA ordinarily provides judicial review in such cases, but the Sacketts could not initiate that process and each day they had to wait for EPA to bring such an enforcement action, they would accrue additional potential liability.  Applying for a permit and then filing suit under the APA if that permit was denied also would not provide an adequate remedy for the EPA’s action. 

Next, the Court held that there was nothing specific in the CWA that precluded judicial review.  Noting that the presumption in the APA favoring judicial review of administrative action can be overcome by inferences of intent drawn from the statutory scheme as a whole, the Court found that nothing in the Clean Water Act either explicitly or impliedly precludes pre-enforcement review.  As a result, the court held that pre-enforcement review of the EPA’s administrative order was appropriate.

The Court emphasized that that it was not deciding whether the Sacketts would win their court case, but only that they had the right to challenge the compliance order.   Therefore, it remanded the case back to the lower court. 

Justice Ginsberg issued a concurring opinion, noting that although the Court’s decision allowed the Sacketts to “immediately litigate” the question of “EPA’s authority to regulate their land under the Clean Water Act,” it did not resolve the question of whether the Sacketts could challenge the “terms and conditions” of the compliance order.  Justice Alito also wrote a separate concurrence in which he criticized federal wetlands regulators and policy stating that the “combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA’s tune.”  He challenged Congress to create a “reasonably clear rule regarding the reach of the Clean Water Act.”

Conclusion

To obtain judicial review of administrative orders issued under the CWA, property owners no longer need to wait until an agency chooses to sue them to enforce the order.  Rather, as Sackett makes clear, they have the right under the APA to sue as soon as they receive the order to which they object.  Although this case specifically addresses an order issued under the CWA, the Court’s holding could arguably apply to other federal environmental statutes as long as they do not explicitly preclude pre-enforcement review. Future cases that address the scope of this decision will determine how big of an impact it will actually have on the power of federal agencies. 

 

Department of Fish and Game Temporarily Halts Mitigation Banking Program

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On March 14, 2012, the California Department of Fish and Game (DFG) announced that budget cuts have made it infeasible for the agency to review and approve new mitigation banking proposals statewide. DFG acknowledges that banking is an important mitigation tool and hopes the pause in banking activities is short-lived. DFG will sign bank agreements that are close to being completed, although it did not state what it considers “close.” DFG will not, however, be approving new banking programs and stated it may not have the capacity to process major amendments to existing agreements. The halt in DFG’s review of new banking programs is temporary and DFG stated that it is open to suggestions from the public for funding options.  Once program funding is secured, DFG hopes to resume banking activities. At this time, DFG does not have a timeline by which it expects to resume its mitigation banking program.

First District Applies “Unusual Circumstances” Exception to Strike Down Application of Categorical Exemption to Construction of Single-Family Residence

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 Berkeley Hillside Preservation et al., v. City of Berkeley et al., (Feb. 15, 2012) __Cal.App.4th__ (Case No. A131254) 

(May 23, 2012, Petition for Review granted; CA Supreme Court Case No. 201116)

On February 15, 2012, the First District Court of Appeal ruled that the City of Berkeley violated CEQA when it approved the construction of a single-family residence based on a determination that the project qualified for a categorical exemption.  Applying the “fair argument” standard to its review of the City and trial court’s contrary conclusion, the court held that an exception to the categorical exemption applied because substantial evidence of a fair argument that the project would have significant environmental impacts had been presented. 

Factual and Procedural Background 

In 2009, a property owner filed an application for a use permit with the City of Berkeley to demolish a single-family dwelling on a 30,000-square-foot lot in Berkeley and replace it with a new home. The application indicated the new dwelling would be a 6,478-square-foot home with an attached 3,394-square-foot garage on a Berkeley hillside. 

Berkeley’s Zoning Adjustment Board approved the project without requiring an EIR because it found that the proposed construction was categorically exempt from CEQA pursuant to CEQA Guidelines sections 15332 (In-Fill Development Projects) and 15303, subdivision (a) (New Construction or Conversion of Small Structures, single-family residence). The board determined that the proposed project did not trigger any of the exceptions to the exemptions under CEQA Guidelines section 15300.2. Specifically, the board concluded that the “unusual circumstances” exception did not apply because the proposed construction would not have any significant effects on the environment due to “unusual circumstances.” 

An appeal was filed with the board, arguing that the unusual circumstances exception should apply because the proposed dwelling would be one of the largest houses in the city.  The city responded to the appeal with its own evidence of comparable sized “dwellings” in the city and the project vicinity. Appellants further challenged the board’s finding that the proposed construction was categorically exempt from CEQA, arguing the project’s unusual size, location, nature and scope may have a significant impact on its surroundings and therefore that an EIR was required to evaluate the proposed construction’s potential impact on noise, air quality and neighborhood safety. 

The city received numerous letters supporting and opposing the appeal. One letter supporting the appeal was submitted by a geotechnical engineer specializing in foundation engineering and construction.  The engineer argued that the project would require significant grading and extensive trucking operations and concluded the project would likely have significant environmental impacts.  A geotechnical engineer for the project proponent disagreed with these findings, noting that the opposing engineer appeared to have relied upon incorrect, outdated project plans and presented evidence that the project would not have a significant impact. 

After receiving a supplemental report and hearing arguments from both sides, the city adopted the findings made by the board, affirmed the decision not to require an EIR, and approved the use permit.  Appellants filed a petition for writ of mandate, which the trial court denied after concluding that there was substantial evidence in the administrative record to support the city’s determination that the infill and new construction categorical exemptions applied to the proposed construction. 

The trial court denied the writ despite finding that the project presented unusual circumstances and finding that the proposed construction would cause significant environmental impacts. The trial court applied a two-part test established in Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006) 139 Cal.App.4th 249, 278. Under Banker’s Hill, when considering whether to apply the “unusual circumstances” exception, a court is required to determine: (1) whether the project presents “unusual circumstances” and (2) whether there is a reasonable possibility of a significant effect on the environment due to the unusual circumstances.” (Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego, supra, 139 Cal.App.4th 249, 278 (original italics).)  In emphasizing that each step is an independent element, Banker’s Hill stated that, “[a] negative answer to either question means the exception does not apply.” (Id.)  Applying this test, the trial court held that, although there were unusual circumstances were present and the project could have significant impacts, the proposed construction did not trigger the exception to the exemptions because the possible significant impacts were not due to the unusual circumstances. 

Court of Appeal Decision 

On appeal, Appellants conceded that the proposed construction was subject to the two CEQA categorical exemptions. Appellants argued, however, that the “unusual circumstances” exception to the exemptions should apply. CEQA Guidelines section 15300.2, subdivision (c), provides that an activity which would otherwise be categorically exempt is not exempt if there are “unusual circumstances” which create a “reasonable possibility” that the activity will have a significant effect on the environment.  

The Court of Appeal reversed the trial court’s decision denying the writ.  It held that where there is substantial evidence that a proposed activity may have an effect on the environment, an agency is precluded from applying a categorical exemption. “The fact that proposed activity may have an effect on the environment is itself an unusual circumstance, because such action would not fall ‘within the class of activities that does not normally threaten the environment,’ and thus should be subject to further environmental review.” 

The Court of Appeal found Appellants had presented substantial evidence of a fair argument that the proposed construction would have a significant effect on the environment.  This alone was enough for the unusual circumstances exception to apply.  The court relied heavily on the letter submitted by the geotechnical engineer in opposition to the project. The court noted contrary evidence was not adequate to support a decision to dispense with an EIR.  As a result of the substantial evidence in the record supporting a fair argument that the project would have a significant impact, the application of a categorical exemption was inappropriate. The Court of Appeal, therefore, ordered the prior judgment reversed, and directed the trial court to order the preparation of an EIR. 

Conclusion 

By taking this approach, the Court of Appeal essentially rejected the two-part Banker’s Hill test.  Interestingly, however, the court did not expressly state that it was rejecting the Banker’s Hill test.  To the contrary, it proclaimed in the decision that “[the] conclusion that the unusual circumstances exception applies whenever there is substantial evidence of a fair argument of a significant environmental impact is [] not inconsistent with Banker’s Hill.”  (A previous error in this statement was corrected by a modification issued by the Court of Appeals on March 7, 2012.) 

Despite the Court of Appeal’s statement otherwise, the decision is not consistent with Banker’s Hill.  The court’s holding that the unusual circumstances exception will apply whenever there is substantial evidence of a fair argument that a proposed project will have a significant effect on the environment is contrary to Banker’s Hill and significantly limits the availability of categorical exemptions under CEQA. The apparent split in authority creates substantial uncertainty for the future application of categorical exemptions.

U.S. Army Corps of Engineers Issues New Procedures for Determining Compensatory Mitigation Ratios

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On February 20, 2012, the U.S. Army Corps of Engineers, South Pacific Division, announced new procedures for determining compensatory mitigation requirements for processing permits under section 404 of the Clean Water Act, section 10 of the Rivers and Harbors Act, and section 103 of the Marine Protection, Research and Sanctuaries Act. 

Background

Compensatory mitigation involves actions that must be taken to offset adverse impacts to wetlands, streams and other aquatic resources authorized by Clean Water Act section 404 permits and other Department of the Army permits. It is the restoration, establishment, enhancement and/or, in certain circumstances, preservation of aquatic resources for the purpose of offsetting unavoidable, adverse impacts that remain after all appropriate and practicable avoidance and minimization of adverse effect has been achieved. The purpose of compensatory mitigation is to develop long-term self-sustaining wetlands and other waters that offset project impacts. As such, compensatory mitigation is a critical tool in helping the federal government to meet the longstanding national goal of “no net loss” of wetland acreage and function.  

Historically, the Corps has determined the required acreage ratio for mitigation (compensatory mitigation ratio) after receiving recommendations from the applicant and the appropriate resource agencies. The Corps would consider the functions and values of the wetlands that might be eliminated or degraded, the functions and values of the proposed mitigation site, and the likelihood of success of the proposed mitigation. Based on all of that information, the Corps would establish the mitigation ratio. 

Until now, the South Pacific Division Regulatory Program has not had procedures or other guidance for determining the mitigation ratios. There were only some general guidelines that required that the rationale used by the Corps to determine the ratio to be documented in the administrative record for the permit action. 

To address this need, a multi-district team was assembled to develop regional procedures for determining and documenting mitigation ratios. 

The New Mitigation Ratio Procedures

The main component of the new procedures is a mitigation ratio checklist that project managers are required to fill out using an applicant’s compensatory mitigation proposal. Project managers then use the checklist to evaluate the applicant’s proposed mitigation for each impact site or type. 

The checklist requires the consideration of several factors, including:

(1)   Qualitative impact-mitigation comparison – This factor is considered if a Corps-approved functional/condition assessment has been obtained.  The quantitative assessment of functional loss at the impact site versus expected functional gain at the mitigation site may warrant a lower or higher ratio. 

(2)   Quantitative impact-mitigation comparison – If a Corps-approved functional/condition assessment has not been obtained, the project manager must use a Before-After-Mitigation-Impact (BAMI) spreadsheet to determine the appropriate mitigation ratio adjustment. Project managers must consider either qualitative or quantitative factors, but not both as they are mutually exclusive. 

(3)   Mitigation site location – The ratio will be increased for mitigation located outside the impacted watershed.

(4)   Net loss of aquatic resource area – The ratio will be increased for mitigation measures that result in rehabilitation, enhancement, or preservation, as opposed to establishment.

(5)   Type conversion – Out-of-kind mitigation generally warrants a higher ratio. 

(6)   Uncertainty – Project managers must consider the inherent uncertainty of mitigation when determining a ratio.  Greater levels of uncertainty will result in a higher ratio. 

(7)   Temporal Loss – Under this factor, project managers consider the amount of time between when the authorized impacts occur and when constructed mitigation is expected to replace lost functions.  A longer delay will warrant a higher ratio. 

A copy of the checklist must be included in the administrative record. 

The procedures apply to the Regulatory Program within the South Pacific Division of the U.S. Army Corps of Engineers which includes Sacramento, San Francisco and Los Angeles, and are applicable for all permit applications that the Corps receives after April 20, 2011, that require compensatory mitigation. 

Conclusion and Implications

The new procedures address a long-standing need in the permitting process and incorporate the most current scientific understanding of mitigation concepts. The Corps intends that they will benefit both the regulated community and the environment by eliminating uncertainty and creating more consistency between different project managers, offices and districts. Because the procedures have a lot of flexibility, however, and the Corps must still make judgment calls throughout the process, it is unclear whether the Corps’ goals will be achieved. The amount of discretion permitted by the procedures could result in continuing inconsistency and uncertainty. 

Sixth District Court of Appeal Holds that an EIR Need Not Consider All Possible Future Uses for Property Sold Under the Surplus Lands Act

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The Flanders Foundation v. City of Carmel-by-the-Sea, et al. (2012) 202 Cal.App.4th 603

On January 4, 2012, the Sixth District Court of Appeal held that the City of Carmel-by-the-Sea did not violate CEQA by failing to analyze in its EIR all potential uses of a property that was to be sold under the Surplus Lands Act (the Act), even though the uses were specifically mentioned in the Act. Continue reading →

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