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THIRD DISTRICT UPHOLDS CITY’S DETERMINATION THAT PROJECT WAS CONSISTENT WITH APPLICABLE PLANNING DOCUMENTS

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In Old East Davis Neighborhood Association v. City of Davis (2021) 73 Cal.App.5th 895, the Third District found the trial court erred in concluding the record did not support the city’s decision that a mixed-use development project was consistent with the general plan, specific plan, and design guidelines. Rather, using the deferential standard of review applied to general plan consistency determinations, the court found sufficient evidence to support that the city’s consistency determination was not unreasonable.

Background

The challenged project is a four-story mixed-use building development offering ground floor retail and apartment units on the three upper levels. The project is located in an area referred to as a “transition area” between the Downtown Core and the Old East Davis residential neighborhood. Both the Downtown Core and the project site are subject to the Core Area Specific Plan and the Downtown and Traditional Residential Neighborhoods Design (DTRN) Guidelines.

A Sustainable Communities Environmental Assessment/Initial Study (SCEA) prepared for the project concluded the project would be consistent with the general plan and would adhere to the design guidelines.

The staff report recommending approval of the project found the project consistent with general plan policies requiring an “architectural fit” with the city’s existing scale and specific plan policies “encouraging more intense mixed-use development and accommodating buildings with floor areas up to three times the site area, while still maintaining scale transition and small city-character.” The report further explained that consistent with the DTRN guidelines the project had been designed to provide a transition area from Downtown to the Old East Neighborhood and to remain in scale with the adjacent area through use, in part, of stepped-back upper stories to concentrate building mass away from the nearby residential properties.

The city council approved the project finding it conformed with the general plan and the specific plan. Petitioner filed suit challenging the approval on the basis that the project failed to meet requirements for an SCEA assessment and that the project was inconsistent with applicable planning guidelines.

The trial court granted the petition in part reasoning that the project did not meet the general plan’s “fundamental policy” that it be a transition property. The city appealed and petitioner cross-appealed.

Court of Appeal’s Decision

On appeal, the city argued that the trial court failed to afford the appropriate deference to the city’s consistency determination. The appellate court agreed. Articulating the applicable standard of review, the court explained that a general plan consistency determination will only be reversed if it is unreasonable based on all the evidence in the record. It further noted that the city is uniquely competent to interpret adopted planning policies and the reviewing court’s role is only to decide whether the city considered the applicable policies and the extent to which the project conforms with those policies.

Applying the correct standard of review, the court found substantial evidence supported the city’s finding that the project serves as a “transition.” The court noted that the applicable planning documents did not provide a formula for determining what constitutes a “transition.” The determination instead rests on subjective criteria, e.g., “architectural fit” and “appropriate scale and character.” The court rejected petitioner’s arguments that the project could not be a transition between Downtown and Old East Davis because it was the largest building in the area, noting that nothing in the planning documents compels such a conclusion. Accordingly, the court held that the trial court erred in applying a formulistic approach that discounted the step-back design, the SCEA analysis, and other factors relied on by the city.

Petitioner also argued that the project violated DTRN guideline language stating that “a building shall appear to be in scale with traditional single-family houses along the street front” — asserting that the use of the word “shall” makes this language mandatory. The court disagreed. The DTRN guidelines explained that, unlike standards, which use unequivocal language to prescribe minimum acceptable limits, guidelines are descriptive statements that illustrate a preferred course of action. Given this, the court held that the DTRN guideline language was “decidedly subjective.” Even if the language could be deemed mandatory, the court found that the city’s conclusion that the scale of the project was consistent with the DTRN guidelines was reasonable based on the evidence in the record.

Petitioner’s cross-appeal raised three issues with the SCEA that were raised in the trial court, but the judgment did not address. Petitioner argued 1) the SCEA failed to adequately analyze historic resources impacts to the Old East Davis conservation district; 2) the SCEA failed to analyze changes to the project that would be necessary if a lease on part of the project site were not renewed; and 3) the SCEA failed to adequately analyze potential hazardous material impacts associated with the historic railroad use of the site.

The Court of Appeal concluded that petitioner had forfeited its claims because it did not challenge the trial court’s tentative decision, and, in any case, found Petitioner’s claims to be without merit. First, the court found that SCEA concluded that the Old East Davis conservation district was not a historic resource. Second, the SCEA did analyze the potential loss of the lease, and the project approvals allowed for that contingency. Third, the SCEA analyzed the potential for discovering hazardous materials and concluded that any impacts would be addressed through standard regulatory conditions.

Lastly, petitioner argued that the project did not meet the requirements for relying on a SCEA because of potential impacts to historic resources and that the city’s findings under Public Resources Code, section 21155.2, were not supported by substantial evidence. The court rejected these arguments, concluding that petitioner relied on the wrong statutory provision in claiming the project did not qualify for a SCEA and failed to raise its challenge to the City’s findings in its opening brief.

– Nina Berglund

FOURTH DISTRICT HOLDS CITY OF PALM SPRINGS’ SHORT-TERM RENTAL ORDINANCE IS CONSISTENT WITH ZONING CODE

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The Fourth District Court of Appeal in Protect Our Neighborhoods v. City of Palm Springs (Jan. 7, 2022) 73 Cal.App.5th 667 (part. pub.), upheld the City of Palm Springs’ ordinance authorizing short-term rentals in residential zones as consistent with the City’s Zoning Code.

Factual Background

The 2008 Short-Term Rental Ordinance

The City of Palm Springs’ Zoning Code authorizes two uses in a single-family residential (R-1) zone without a permit: (1) a “permanent single-family dwelling”; and (2) uses “customarily incident to the permitted uses when located on the same lot therewith.” All other uses not expressly permitted are prohibited, and the Planning Commission shall not permit commercial uses in such zones.

As a popular vacation destination, the City has expressly allowed for short-term rentals of single-family dwellings since 2008. The corresponding ordinance initially applied to rentals for 28 days or less and limited occupancy based on the number of bedrooms. Rental owners were required to register the property with the City and use “reasonably prudent business practices” to ensure that renters and their guests did not create unreasonable disturbances or engage in disorderly conduct.

The 2016–2017 Ordinance Amendments

In 2016, the City amended the short-term rental ordinance to authorize short-term rentals of single-family residences and duplexes, but not apartments. The City adopted subsequent amendments in 2017, which barred ownership of more than one vacation rental, limited rentals to 36 per year, and added new provisions for “estate homes” (5+ bedrooms) and “homesharing.” The 2017 amendments also included findings that—when taken together—confirmed vacation rentals are permitted in R-1 zones as “ancillary and secondary uses of residential properties.”

Procedural Background

Protect Our Neighborhoods, an organization of homeowners opposed to vacation rentals, filed a petition for writ of mandate alleging the 2017 amendments violated the City’s Zoning Code, General Plan, and CEQA. The trial court denied the petition. Protect Our Neighborhoods appealed on the zoning code claims, but did not appeal the trial court’s ruling on the CEQA or General Plan claims.

The Court of Appeal’s Opinion

On appeal, petitioners alleged short-term rentals violated the zoning code because they are “commercial,” not “residential” uses, and improperly change the character of the R-1 Zone. Petitioners also contended that, if the zoning code permits short-term rentals at all, it only does so on the condition that an owner obtain a land use or conditional use permit.

Conflict With the Zoning Code

Effect of a Conflict

The Court of Appeal rejected petitioners’ contention that the ordinance conflicted with the zoning code. Petitioners treated the code as some kind of “higher law” that invalidated any subsequent conflicting law, even though the zoning code and ordinance are “coequal parts of the Municipal Code.” The court thus reasoned that, to the extent they conflicted with one another, “the most recently enacted statute expressed the will of the Legislature.” Therefore, even if the ordinance and zoning code could not be reconciled, the ordinance would remain valid because the City’s findings evinced its intent to repeal any inconsistent provision of the zoning code.

Existence of a Conflict

The court also rejected petitioners’ claim that vacation rentals constituted “commercial uses” that were barred in R-1 residential zones. The court noted that R-1 zones expressly permit any use that is “customarily incident to” the use of a “permanent single-family dwelling.” A “dwelling” includes “a building or portion thereof designed exclusively for residential occupancy…” Here, the ordinance plainly states that “vacation rentals are an ‘ancillary and secondary use of residential property…’” Petitioners failed to establish that this interpretation was erroneous.

Petitioners also failed to establish how short-term vacation rentals fell within the definition of a “commercial use.” The zoning code meaningfully distinguishes between commercial stays, and the City could reasonably conclude that the short-term rental of a single-family dwelling has different impacts than the short-term rental of a 20, 50, or 100-unit motel. That vacation rentals will impermissibly change the character of the R-1 zone is equally unavailing. Petitioners mistakenly cited to the “business regulations” provision of the code’s “home occupations” chapter, which does not apply to short-term rentals. Nevertheless, even if rentals did affect nearby single-family residents, allowing them was a legislative judgment left up to the City.

The Ordinance’s Findings

Petitioners claimed the ordinance’s supportive findings were internally inconsistent because they impliedly permitted an owner to acquire property and exclusively use it as a short-term rental without ever living in it. The court observed that a property can be “residential,” even if it is vacant. The code defines “dwelling” based on whether the building is designed exclusively for residential occupancy, not whether the building is actually occupied. The building is then limited to use as a single-family residence or uses customarily incident thereto, such as vacation rentals.

Need for a Discretionary Permit

Finally, petitioners argued short-term rentals in R-1 zones required issuance of a discretionary permit. Though the zoning code only requires permits for large day cares, model homes, temporary onsite trailers in conjunction with sale of subdivision lots, accessory apartments, churches, schools, and golf courses in R-1 zones, petitioners argued that vacation rentals have greater impacts than those uses. The court rejected this by observing that the zoning code does not require permits for “similar uses” with “similar impacts.” Rather, uses customarily incident to uses as a single-family dwelling—i.e., vacation rentals—are allowed without a permit.

– Bridget McDonald

FIRST DISTRICT UPHOLDS STATE WATER RESOURCES CONTROL BOARD’S RELIANCE ON CEQA’s MINISTERIAL EXEMPTION FOR REGISTRATION OF APPROPRIATION OF WATER FOR DOMESTIC USE UNDER THE WATER RIGHTS PERMITTING REFORM ACT

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In Mission Peak v. State Water Resources Control Board (2021) 72 Cal.App.5th 873, the First District Court of Appeal held that the State Water Resources Control Board’s (Board’s) registration process is ministerial and therefore exempt from CEQA.

Background

The Water Rights Permitting Reform Act of 1988 permits eligible persons to acquire a right to appropriate up to 10 acre-feet per year of  water for domestic or other specified uses by completing a registration process with the Board. Pursuant to this Act, the State Water Resources Control Board granted a small domestic use registration to two Alameda County property owners without conducting environmental review on the premise that the action was ministerial and thereby did not trigger CEQA.

Mission Peak Conservancy and Kelly Abreau (collectively, Mission Peak) sued the Board, alleging that it violated CEQA by approving the registration without conducting CEQA review. Mission Peak contended that the Board’s approval was discretionary and that it should have denied the registration because the property owners did not qualify for small domestic use and also because their registration form contained false information. The Board filed a demurrer, which the trial court sustained without leave to amend. Mission Peak appealed.

Court of Appeal’s Decision

The Court of Appeal determined that the Board’s registration process was indeed a ministerial act, not discretionary, and was therefore exempt from CEQA pursuant to Public Resources Code section 21080, subdivision (b)(1). As the court explained, “[m]inisterial projects involve ‘little or no personal judgment by the public official as to the wisdom or manner of carrying out the project.’ (Guidelines, § 15369.) . . . The test is whether the law governing the agency’s decision to approve the project gives it authority to require changes that would lessen the project’s environmental effects.”

The court determined the Board did not have such authority here. Although the Board has statutory authority to impose general conditions applicable to all registrations, it did not have authority “to place conditions on the . . . registration to lessen its environmental effects.” The Board determines whether a registration is compliant by applying a checklist of fixed criteria, and the registration is automatically deemed complete if it meets these criteria. Accordingly, there is no discretion involved in the registration, and it is therefore not subject to CEQA.

Specifically, the Court rejected Mission Peak’s argument that “a different agency, the Department of Fish and Wildlife, has discretion to impose conditions that could ameliorate the project’s environmental impacts” and therefore the the process is discretionary. Not so. As the court explained, another agency’s discretionary authority for its review cannot be imputed to the Board. Mission Peak then argued that “the project did not satisfy the requirements for a small domestic use registration because the [applicant] misrepresented facts,” and thereby the Board did have discretion in that it could deny the project or request changes to meet program requirements. But, “the test is whether the Board had the legal authority to impose environmentally beneficial changes as conditions of the project,” not whether the agency could request changes on an application or deny it.  Lastly, Mission Peak argued that the Board violated CEQA because the project did not meet program requirements. The court pointed out that “this is simply an argument that the Board made an erroneous ministerial decisions.” And such an error is not the basis for a CEQA claim. Plainly stated, “CEQA does not regulate ministerial decisions—full stop.”

– Veronika S. Morrison

SIXTH DISTRICT HOLDS COASTAL COMMISSION VIOLATED CEQA BY FAILING TO COMPLETE ENVIRONMENTAL REVIEW OF COASTAL DEVELOPMENT PERMIT PRIOR TO PROJECT APPROVAL

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In Friends, Artists, and Neighbors of Elkhorn Slough v. California Coastal Commission (2021) 72 Cal.App.5th 666, the Sixth District Court of Appeal held that the California Coastal Commission (CCC) violated CEQA by analyzing a coastal development permit’s environmental impacts and adopting findings in support thereof after it had approved the permit and underlying project. Although the CCC is authorized to issue “revised findings” when the Commission’s action differs from what was proposed in the staff report, the court held that the revised findings in this case went too far and were an improper pot-hoc rationalization.

Background

In 2000, Real Party in Interest Heritage/Western Communities, Ltd., applied to the County of Monterey for a combined development permit and coastal development permit (CDP) for the Rancho Los robles Subdivision. The project proposed more than 100 residential units on a commercial parcel. Monterey County prepared an EIR containing several alternatives, including one with a reduced number of units.

In 2008, the County Planning Commission recommended denying the project due to water supply and traffic congestion issues. Heritage/Western appealed the denial to the County Board of Supervisors. The Board disagreed with the Planning Commission and approved the project. The Board also certified the EIR and adopted a statement of overriding considerations regarding significant and avoidable impacts to traffic, groundwater, and seawater intrusion.

In 2009, Friends, Artists, and Neighbors of Elkhorn Slough (FANS) appealed the Board’s decision to the CCC, alongside two Coastal Commissioners. CCC staff issued a staff report recommending denial of the CDP primarily due to lack of adequate water supply. The staff report concluded further analysis for certain issues was unwarranted in light of staff’s recommendation to deny the permit.

On November 8, 2017, the CCC held a de novo hearing and voted to approve the CDP, despite staff recommending denial.

In August 2018, CCC staff issued a subsequent report, containing revised findings in support of the CCC’s approval of the CDP. The 2018 report concluded that water supply was no longer an issue that necessitated denying the project. The 2018 staff report also considered other impacts previously identified in the 2017 report and determined they were no longer relevant or significant, and that staff’s prior conditions of approval would still apply to the project but be adjusted where necessary and implemented in a manner consistent with the project as approved by the Commission. Finally, the report concluded that the project was consistent with CEQA because it adequately addressed any potential adverse impacts to coastal resources, and there were no additional feasible alternatives or mitigation measures that would substantially lessen adverse impacts. The CCC approved the revised findings at a public hearing on September 13, 2018, approximately ten months after the CDP was approved.

FANS filed a petition for writ of mandate challenging the CCC’s approval of the CDP. The trial court denied the petition, rejecting FANS’ assertion that the CCC violated CEQA by approving the project without conducting environmental review before making findings. FANS appealed.

Court of Appeal’s Decision

On appeal, FANS asserted that the CCC failed to employ the proper procedures required by CEQA and the Coastal Act because its “revised findings” were a post-hoc rationalization for the CCC’s prior decision to approve the project and went beyond what was permitted by the CCC’s regulations. The Court of Appeal agreed and reversed the trial court.

The Court of Appeal outlined the steps for seeking CCC review of an approved CDP application and noted that the Commission’s de novo review of a permit application mimics CEQA’s environmental review process. The analysis and recommendation in a staff report must be accompanied by specific findings regarding—among other factors—the project’s conformity with the Coastal Act and CEQA. If the CCC’s action on the project substantially differs from staff’s recommendation, the prevailing Commissioners must separately state the basis to allow staff to prepare a revised staff report with proposed revised findings that reflect the action taken by the Commissioners. Under section 13096 of the CCC’s regulations, a public hearing must be held before the revised findings are adopted. (Cal. Code Regs., tit. 13, § 13096, subd. (c).) After the hearing, the CCC must vote on whether to adopt the revised findings.

Based on the facts of the case, the court held that the CCC’s environmental review for the CDP was incomplete at the time of approval, and the revised finding did not make up for the shortcoming. The court determined that the CCC’s decision to approve the project relied on a staff report that failed to contain elements required by CEQA (and the Commission’s certified regulatory program), including project alternatives, feasible mitigation measures to substantially lessen significant adverse effects, and conditions of approval.

In reaching its conclusion, the court explained the importance of these factors: “Requiring specific findings about alternatives and mitigation measures ‘ensures there is evidence of the public agency’s actual consideration of alternatives and mitigation measures, and reveals to citizens the analytical process by which the public agency arrived at its decision.’ [Citation.]” (Opinion, p. 32.) Through this lens, the court clarified that section 13096 “requires commissioners to set forth the analytic route between the evidence and the action at the hearing before approval.” The court further observed that no prior case law involved facts similar to this one, where the CCC’s environmental analysis was this incomplete at the time a CDP was approved. Accordingly, the court found that the CCC abused its discretion because it was required to conduct the analysis before it approved the project.

– Bridget McDonald

FOURTH DISTRICT UPHOLDS EIR FOR ROADWAY CONNECTION PROJECT AND HOLDS CITY’S QUASI-LEGISLATIVE APPROVALS WERE NOT SUBJECT TO PROCEDURAL DUE PROCESS REQUIREMENTS

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In Save Civita Because Sudberry Won’t v. City of San Diego (2021) 72 Cal.App.5th 957, a partially published opinion, the Fourth District Court of Appeal held that the City of San Diego did not violate CEQA by failing to summarize revisions made in its recirculated draft EIR, and that the City’s certification of the Final EIR and approval of the project were quasi-legislative acts not subject to procedural due process requirements.

Background

In 2008, as part of an alternative to a proposed mixed-use development project, the City of San Diego proposed a four-lane major roadway in Mission Valley that would directly connect the development to local roadways. This connector roadway required an amendment to the Serra Mesa Community Plan (SMCP) and the City’s General Plan.

In April 2016, the City issued examined this connector roadway as its own project and prepared a programmatic draft EIR (PDEIR) for the SMCP and General Plan amendments. In March 2017, when roadway construction became foreseeable and upon a large volume of public comment, the City issued a revised and recirculated draft EIR (RE-DEIR) that looked at both the programmatic portion of the project, the adoption of amendments, as well as the actual construction of the roadway. In August 2017, the City issued the Final EIR for the project. Also in August 2017, the Planning Commission voted unanimously, with one member recusing, to recommend approval of the project and certification of the FEIR, with the City Council’s Smart Growth & Land Use Committee voting the same a month later. The City Council certified the Final EIR and approved the project in October 2017.

Save Civita Because Sudberry Won’t (Save Civita) filed a petition for writ of mandate and complaint for declaratory and injunctive relief challenging the City’s certification of the Final EIR and approval of the project on several grounds, namely here that it violated the requirement in CEQA Guidelines section 15088.5, subdivision (g) that a recirculated EIR summarize the revisions made to the prior EIR, and also that it violated procedural due process rights. The trial court denied the petition and complaint. Save Civita appealed.

The Court of Appeal’s Decision

Save Civita argued that the City violated CEQA Guidelines section 15088.5, subdivision (g), because it failed to summarize the changes in the RE-DEIR from the PDEIR, thereby forcing readers to “‘leaf through thousands of pages,’” and cause them “‘to have the mistaken belief’” that the two EIRs address the same project. The Court of Appeal disagreed, holding that statements in the RE-DEIR adequately summarized the changes to the PDEIR, and that these summary provisions informed the public that the revisions to the PDEIR were extensive and the PDEIR had been effectively “replaced” by the RE-DEIR. To make its determination, the court also looked to section 15088.5, subdivision (f), which requires that an agency inform the public that, when an EIR is so substantially revised that the document is recirculated, then comments on the prior EIR will not receive a response. The City fulfilled this criteria.

Furthermore, the court concluded that even if the City had failed to comply with the summation requirements of section 15088.5, any such failure was not prejudicial because it did not deprive the public of a meaningful opportunity to discuss and critique the project. Specifically, the court noted that the administrative record contained “ample and vigorous” public discussion of the RE-DEIR, proof that there were not fatal obstacles to public discourse created by any absence of a revision summary.

Save Civita also argued that the City’s certification of the Final EIR and project approval violated the public’s procedural right to due process and a fair hearing because a member of the City Council, who voted to approve the project was, according to Save Civita, “‘a cheerleader for the Project’” who had predetermined his vote. The court foreclosed this claim by explaining that procedural due process requirements are applicable only to quasi-adjudicatory hearings. Here, the City’s actions were quasi-legislative because they involved the adoption of generally applicable rules on the basis of broad public policy. The project approved by the City and analyzed in its EIR—construction of the roadway and amendment of planning documents—were, as the court determined, matters of public policy that required it to assess a broad spectrum of community costs and benefits. Therefore, procedural due process did not apply.

– Veronika S. Morrison

Second District Holds That Labor Union’s Interest in CEQA Action Was Not Sufficiently Direct and Immediate for Permissive Intervention

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In South Coast Air Quality Management District v. City of Los Angeles (2021) 71 Cal.App.5th 314, the Second District Court of Appeal upheld the trial court’s decision to deny a labor union’s motion for permissive intervention in a CEQA case.

Background

This case involved the City of Los Angeles’s issuance of a permit authorizing a shipping company owned by the Chinese government to construction of a terminal within the Port of Los Angeles. In 2008, the City completed an EIR that concluded that the project would have significant and unavoidable environmental impacts. The EIR incorporated over 50 mitigation and lease measures to reduce these impacts.

In 2020, the City prepared a revised EIR that eliminated some of the mitigation measures required in the 2008 EIR. The revised EIR also concluded that the project would have significant, unavoidable, and increased impacts on air quality, and that it would exceed a threshold for cancer risk. The 2020 EIR did not contain enforcement provisions for the mitigation measures, did not require a lease amendment, and did not require the project applicant to implement or pay for the mitigation measures.

The South Coast Air Quality Management District filed a petition for writ of mandate, claiming that the City violated CEQA by failing to enforce the measures required by the 2008 EIR, and certifying the 2020 EIR, allowing the project to operate under allegedly inferior measures.

The petition named the City of Los Angeles, the Los Angeles City Council, the Los Angeles Harbor Department, and the Los Angeles Board of Harbor Commissioners as respondents, and several shipping companies as real parties in interest.

The California Attorney General and the California Air Resources Board sought permissive intervention pursuant to Code of Civil Procedure section 387, subdivisions (d)(1) and (d)(2). The trial court granted both parties’ motions.

The International Longshore and Warehouse Union, Locals 13, 63, and 94 also sought permissive intervention, arguing that no existing party could advocate for its members’ interests adequately. Specifically, the Union claimed that it was the only party that could properly protect the 3,075 jobs at stake. The trial court denied the Union’s motion, determining that its interest was speculative and consequential, rather than direct and immediate, as required for permissive intervention. The Union appealed.

The Court of Appeal’s Decision

The Court of Appeal upheld the trial court’s denial of the Union’s motion for permissive intervention. The court explained that pursuant to Code of Civil Procedure section 387, the statute for permissive intervention, there must be a balancing of the interests of those affected by a judgment against the interests of the original parties in pursuing their case unburdened by others. It also emphasized that trial courts are afforded broad discretion to strike this balance, and that the reviewing court reviews for abuse of discretion—reversing only if the appellant establishes the decision results in a miscarriage of justice or exceeds the bounds of reason.

The court further explained that the Union failed to articulate any unique interest that was not already represented by the other parties. The court found that the Union’s position on the merits was duplicative, that it had no concerns with the actual environmental analysis in the 2020 EIR, and that it was not the only party advocating for a remedy that did not result in a shut down of the project or rescission of its permits. Therefore, the Court of Appeal concluded that it was reasonable for the trial court to determine that the Union’s participation in the case would be largely cumulative and would unduly complicate an already complex case involving numerous parties, and to accordingly deny the Union’s motion for permissive intervention.

Third District Holds Order Requiring a Limited EIR Is Not an Appropriate Remedy Where a Project May Have Significant Impacts

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In the published portions of Farmland Protection Alliance v. County of Yolo (2021) 71 Cal.App.5th 300, the Third District Court of Appeal held that a limited environmental impact report (“EIR”) is not an appropriate remedy where a court finds that substantial evidence supports a fair argument that the project might have a significant environmental impact.

Background

The Yolo County Board of Supervisors adopted a mitigated negative declaration and issued a conditional use permit for a bed and breakfast and commercial event facility on agriculturally-zoned property. Project opponents filed a lawsuit alleging, among other claims, that the MND was inadequate under CEQA. The trial court rejected most of petitioners’ claims but found substantial evidence supported a fair argument that the project may have a significant impact on three special-status species, and as the remedy, (1) ordered the County to prepare a limited EIR addressing only the project’s impacts on the three species, and (2) allowed the project to continue operations pending further environmental review.

Petitioners appealed the trial court’s decision, arguing that the court violated CEQA by ordering preparation of a limited EIR after its finding of potentially significant impacts, and allowing the project to continue operating while further environmental review was pending.

The Court of Appeal’s Decision

The Court of Appeal held that Public Resources Code section 21168.9 does not authorize a court to split a project’s environmental review across two types of documents, such as a negative declaration or mitigated negative declaration and an EIR. The court noted that while section 21168.9 is designed to provide a trial court with flexibility in crafting remedies to ensure compliance with CEQA, it does not authorize a court to circumvent CEQA’s mandatory provisions. According to the court, CEQA requires an agency to prepare a full EIR when substantial evidence supports a fair argument that any aspect of the project may have a significant effect on the environment. The Court of Appeal therefore found that the trial court erred by ordering preparation of a limited EIR after finding the fair argument test had been met as to impacts to the three species.

The Court of Appeal declined to consider petitioners’ argument that the trial court erred in allowing the project to operate while the limited EIR was being prepared. While the appeal was pending, the County filed a return to the peremptory writ of mandate stating the limited EIR ordered by the trial court had been certified.  As a result, the Court of Appeal determined the portion of the judgment allowing the project to continue to operate no longer had any effect, and therefore, the issue was moot.

Fourth District Upholds City of Tustin’s Reliance on CEQA’s Infill Exemption for a Costco Gas Station and Parking Lot

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In Protect Tustin Ranch v. City of Tustin (2021) 70 Cal.App.5th 951, Division Three of the Fourth District Court of Appeal upheld the City of Tustin’s reliance on CEQAs’ categorical exemption for infill projects, holding that the petitioner failed to show that the project did not meet the requirements for the exemption or that an exception to the exemption applied.

Background

This case involves a proposal by Costco Wholesale Corporation to build a gas station next to an existing Costco warehouse in the Tustin Ranch area of the City of Tustin. The project site is already developed with a shopping center and is surrounded by commercial uses, as well as some residential development.

The project includes two components: (1) a 16-pump gas station with a canopy and landscaping, and (2) the demolition of an existing Goodyear Tire Center and parking lot, which would be replaced with a new 56-stall parking lot.

The planning commission voted to approve the project and adopted a resolution finding that the project is categorically exempt from CEQA under CEQA Guidelines section 15332 (Class 32, Infill Development Projects).

Members of the public appealed the planning commission’s decision to the city council. The staff report for the city council hearing explained why staff believed the project fell within the infill exemption. It also explained that, although Costco’s initial application indicated that the project site is 11.97 acres, the project site (i.e., the portion of the site to be developed) is actually only 2.38 acres.

The city council agreed with the planning commission and staff that the project is exempt under the infill exemption. The city council adopted a resolution finding the project categorically exempt and approved the project. In doing so, the city council expressly found that the project did not present any unusual circumstances as compared to other projects that would qualify for the exemption.

The trial court upheld the city’s determination that the project is categorically exempt from CEQA review. Petitioner appealed.

The Court of Appeal’s Decision

To qualify for the Class 32 infill exemption, a project must meet five criteria: (1) the project must be consistent with the general plan and with the zoning code, including all applicable general plan policies and zoning regulations; (2) the project must be located within city limits on a site that is no larger than five acres and is surrounded by urban uses; (3) the site must have no value as habitat for special-status species; (4) approval of the project must not cause any significant impacts related to air quality, noise, traffic, or water quality, and (5) the site must be adequately served by utilities and public services. (CEQA Guidelines, § 15332.)

Petitioner challenged the city’s reliance on the infill exemption only with respect to the size of the project, arguing that the project does not qualify for the exemption because the project site is larger than five acres. The court explained that the city’s conclusion that the project site is five acres or less is a factual determination to which the court applies the deferential “substantial evidence” standard of review. Under this standard, the court does not weigh conflicting evidence. Rather, the court must uphold the agency’s determination if it is supported by any substantial evidence in the record as a whole. In the case before it, explained the court, multiple documents in the administrative record confirmed that the size of the project site is 2.38 acres. For instance, Costco’s revised development application states that the “area of work” would be 2.38 acres, inclusive of the new gas station and parking at the demolished Goodyear site. A water quality management plan and maps of the project also showed that the site is 2.38 acres.  Additionally, at the city council’s hearing on the project, city staff clarified that the total project site was calculated by adding together the acreages of both components of the project—1.74 acres for the gas station and 0.64 acres of new surface parking where the Goodyear center would be demolished. Thus, held the court, substantial evidence supports the city’s determination that the project fits within the requirements of the infill exemption.

The court next considered whether the “unusual circumstances” exception to the categorical exemption applies. CEQA Guidelines section 15300.2, subdivision (c), provides that “[a] categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” If a project meets the requirements of a categorical exemption, the burden is on the party challenging the exemption to produce evidence supporting an exception. The Supreme Court, in Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, explained that this showing may be made in two ways. First, the challenger may identify evidence that the project will have a significant environmental impact. Alternatively, the challenger may show that the project is unusual because its features distinguish it from others in the exempt class, and that there is a “reasonable possibility” that the project will result in a significant environmental impact due to that unusual circumstance. The substantial evidence standard applies to an agency’s determination that there are no unusual circumstances. But the less deferential “fair argument” standard applies to the question of whether there is a reasonable possibility that the unusual circumstances may cause a significant effect.

Petitioner argued that the unusual circumstances exception applied for three reasons. First, the project is located on a former Goodyear Tire Center where tires were installed and oil and other fluids were changed. Second, the proposed gasoline fueling station with 16 pumps is unusually large. And third, Costco proposed to re-route traffic during peak hours. The court summarily rejected these arguments, however, because petitioner had failed to explain why these features made the project unusual compared to other projects qualifying for the infill and exemption. In fact, evidence in the record showed that the project is similar to other Costco gas stations in California and is not unusually large—as evidenced by the fact that the project is less than five acres in size. The court went so far as to question whether the size of a project can be a characteristic that makes an otherwise exempt infill project unusual, since the infill exemption is expressly limited to projects less than five acres in size.

Petitioner further argued that the city’s reliance on the exemption was improper because the city should undertake studies to determine whether the project would contaminate soils. The court rejected this argument, however, explaining that unsupported assumptions and speculation are not enough to require the city to conduct CEQA review. By law, a categorically exempt project is deemed not to have potentially significant impacts unless the project’s administrative record shows that an exception to the exemption applies. Here, petitioner failed to show an exception applies. The fact that the project may have a significant environmental impact is not a sufficient basis to require CEQA review for a categorically exempt project.

Implications

This case highlights the standard of review that the courts will apply to an agency’s determination that a project is categorically exempt from CEQA. The burden of showing that the “unusual circumstances” exception applies is on the petitioner. In this case, the petitioner did not offer any concrete reasons or evidence showing that the project is distinct from other projects qualifying for the in-fill exemption. Therefore, the court upheld the city’s reliance on the exemption.

In a Procedurally-Dense Opinion, First District Court of Appeal Clarifies that Real Parties in CEQA Cases Are Not Always Indispensable Parties

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In Save Berkeley’s Neighborhoods v. Regents of the University of California (2021) 70 Cal.App.5th 705, the First District Court of Appeal upheld a trial court’s determination that the developer and operator of a proposed campus expansion project were not indispensable parties to a lawsuit challenging the Regents of the University of California’s (Regent’s) approval of that project. In doing so, the court held that Assembly Bill No. 320 (AB 320) (2011–2012 Reg. Sess.)—which amended CEQA to require agencies to identify the recipients of project approvals on a project’s notice of determination (NOD) and to require CEQA petitioners to name and serve those persons or entities listed on the NOD—did not alter the court’s analysis of whether a party is “indispensable” to the lawsuit under Code of Civil Procedure section 389, subdivision (b) (CCP section 389(b)).

Background

The Regents approved a project to demolish an existing parking structure, construct student housing above a new parking structure, and develop a new academic building adjacent to the new residential building (project). The Regents prepared and certified a supplemental environmental impact report (SEIR) for the project. On May 17, 2019, the Regents filed an NOD, which identified American Campus Communities (ACC) and Collegiate Housing Foundation (CHF) as the parties undertaking the project. ACC is the developer for the project, and CHF is the ground lessee and borrower for the housing component of the project.

On June 13, 2019, petitioner Save Berkeley’s Neighborhoods filed a petition for writ of mandate seeking to vacate the Regents’ certification of the SEIR on the ground that the Regents violated CEQA. The petition named the Regents as a respondent, but did not name ACC or CHF as parties. Nor did petitioner serve ACC and CHF. On September 18, 2019, petitioner filed a first amended petition, which added ACC and CHF as real parties in interest. The amended petition acknowledged that ACC and CHF were listed as parties undertaking the project in the NOD, and thus were being named pursuant to Public Resources Code section 21167.6.5, subdivision (a), which requires the entities identified as recipients of project approvals on an NOD to be named as real parties in interest.

ACC and CHF filed demurrers to the first amended petition, asserting that petitioner failed to name them as parties within the applicable statute of limitations and that they are necessary and indispensable parties to the litigation, so the entire action should be dismissed. The trial court sustained the demurrers without leave to amend, but did not dismiss the lawsuit. The court held that ACC and CHF should have been named as real parties because they were listed on the NOD as the parties undertaking the project. Because petitioner had failed to amend its petition to name them as parties within 30 days after the Regents filed the NOD, petitioner’s challenge against ACC and CHF was time-barred under Public Resources Code section 21167. The court held, however, that the failure to timely name ACC and CHF as real parties did not justify dismissing the case because ACC and CHF were not indispensable parties under CCP 389(b).

ACC and CHF appealed, arguing that the trial court erred in concluding they were not indispensable parties. Petitioner filed a cross-appeal, arguing that the trial court erred in applying CEQA’s 30-day statute of limitations to the lawsuit because, according to petitioner, the Regents’ NOD for the project – the filing of which triggered the 30-day statute of limitations – was defective. The Court of Appeal affirmed the trial court’s order sustaining the demurrer.

Discussion

Appealability

As a threshold matter, the appellate court considered whether the trial court’s order sustaining the demurrer was appealable. Petitioner argued that it was not because the appeal arose from an interlocutory (non-final) order and thus violated the “one final judgment” rule. Furthermore, petitioner argued, the issue of whether AOC and CHF are indispensable parties remained in the underlying action because that issue was also raised by the Regents, who remained a party to the action, so the court should not consider that issue yet. The court rejected these arguments. The court explained that in actions involving multiple parties, an order fully disposing all of the issues as to one party is appealable, even if those same issues remain as to the other parties. Accordingly, the appeal was proper.

Necessary and Indispensable Parties

The court next considered whether the trial court erred in determining that CHF and ACC were not indispensable parties. If CHF and ACC were indispensable parties, the lawsuit must be dismissed in full. If they were not indispensable, then petitioner’s lawsuit against the Regents could move forward. The Court of Appeal agreed with the trial court that CHF and ACC were not indispensable parties.

Assembly Bill 320 Did Not Alter a Court’s Analysis of Whether a Real Party is “Indispensable”

CEQA currently requires petitioners to name, as a real party in interest, any person or entity identified on an NOD as a recipient of the project’s approval. Prior to 2012, however, CEQA did not require the recipients of the project approvals to be identified on the NOD. CEQA did, however, require any recipient of a project approval to be named as a real party in interest. The phrase “any recipient of an approval” was not defined by the statute, leading to confusion in the courts.

In 2011, the Legislature passed AB 320, which amended CEQA to require agencies to identify the recipient of a project’s approval on the project’s NOD. (Pub. Resources Code, § 21108.) It also amended CEQA to require petitioners to name the entities identified on the NOD as real parties in interest and to serve the petition on those entities. (Pub. Resources Code, § 21167.6.5, subd. (a)). The AB 320 amendments also provided that the “failure to name potential persons, other than those real parties in interest described in Public Resources Code, § 21167.6.5, subdivision (a), is not a ground for dismissal pursuant to Section 389 of the Code of Civil Procedure.” (Pub. Resources Code, § 21167.6.5, subd. (d).)

ACC and CHF argued that AB 320 was intended to provide “finality and certainty” as to who must be joined in a CEQA action and, therefore, CCP 389(b), which provides an equitable balancing test for determining who constitutes an indispensable party, does not apply. The court rejected this argument, holding that the AB 320 did not alter judicial analysis of whether a party is indispensable.

ACC and CHF argued that the express language of Public Resources Code section 21167.6.5, as amended by AB 320, demonstrates that CCP 389(b) does not apply. Specially, subdivision (d) of that statute states: “Failure to name potential persons, other than those real parties in interests described in subdivision (a), is not grounds for dismissal pursuant to Section 389 of the Code of Civil Procedure.” (Italics added.) The court disagreed that this language indicates that CCP 389(b)’s equitable balancing test does not apply when the petition fails to name a real party. As the court explained, the statute does not explicitly state that CCP 389(b) cannot be applied in CEQA actions in which the real party has not been properly named and served. Rather, that statute only suggests that the failure to name a real party in interest may be grounds for dismissal, depending on the equitable factors set forth in CCP 389(b).

Turning to the Legislative intent, the court found that in enacting AB 320, the Legislature did not intend to prevent application of CCP 389(b). Rather, the bill was only meant to clarify who constitutes a real party in interest, as there had been confusion on that issue in the courts. Moreover, AB 320’s Legislative history suggests that rather than intending to limit CEQA actions, AB 320 was intended to “prevent the dismissal of important and meritorious CEQA cases.” Applying a blanket rule that the failure to timely name a real party in interest constitutes a ground for mandatory dismissal of a CEQA case would frustrate that intent.

Application of CCP 389(b)’s Equitable Factors

The court next considered whether the trial court erred in holding that ACC and HCF were not indispensable parties. Under CCP 389(b), if a necessary party cannot be joined, “the court shall determine whether in equity and good conscious the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person’s absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person’s absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.” (Code Civ. Proc., § 389, subd. (b).)

Applying these factors, the trial court held that ACC and CHF were not indispensable parties. Among other things, ACC and CHF’s interests were closely aligned to that of Regents because ACC and CHF were undertaking the project for the Regents’ own use and benefit. Moreover, petitioner would have no way of challenging the SEIR if the case was dismissed. On the other hand, ACC and CHF were parties in a related case challenging the same SEIR and were thus unlikely to be harmed by a settlement.

On appeal, ACC and CHF argued that they had fundamentally different interests in the project than the Regents. The Regents’ interest was to add housing and academic space to the campus, whereas ACC and CHF’s interest was to develop and operate the project. The court disagreed, explaining that the Regents, like ACC and CHF, had a strong interest in moving forward with the project; the fact that the Regents might have different motivations for doing so was immaterial. Further, contrary to ACC and CHF’s assertion, the Regents had a strong economic interest in the project because the Regents would manage and operate the new parking structure and the new academic building and the Regents would regain ownerships of the project once the project’s debt was repaid. ACC and CHF had failed to cite any evidence that they had unique financial interests or would be more harmed by an adverse judgment than the Regents. Accordingly, the trial court properly concluded that ACC and CHF were not indispensable parties.

Petitioner’s Cross Appeal – Did the Trial Court Err in Applying CEQA’s 30-Day Statute of Limitations?

Turning to the cross appeal, the court held that the trial court properly applied CEQA’s 30-day statute of limitations to the first amended petition. Petitioner argued that the statute of limitations should not apply because the Regents’ NOD for the project failed to accurately describe the project. In particular, the NOD did not explain that the project would result in an increase in student enrollment. The court disagreed that such information was required, holding that an increase in student enrollment was not a material component of the project. To the contrary, the NOD and SEIR indicated that the project was intended to accommodate the existing student body and planned growth, not necessarily to increase enrollment. Although it is possible that the project could result in an increase in enrollment, the record did not suggest that increasing enrollment was a component of project. Therefore, the trial court correctly held that the Regents’ filing of the NOD triggered CEQA’s 30-day statute of limitations.

Implications

The Court of Appeal was unwilling to interpret AB 320’s amendments to CEQA as modifying judicial analysis of whether a party is indispensable in a CEQA case. Although Public Resources Code 21167.6.5, as amended, could be interpreted as implying that the failure to name a real party in interest is a ground for dismissal under CCP 389(b), as the court noted, the statute does not explicitly require such a result. Thus, where a CEQA petitioner fails to name all parties listed as approval recipients on an NOD (or a notice of exemption (NOE)), case law decided under the former statute is still relevant to the question of whether a party is indispensable. The case also clarifies that although a project might result in changes to the existing baseline (e.g., an increase in student enrollment), that change need not be described as a component of the proposed project in the NOD or NOE.

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