In a procedurally complicated holding, the Fourth District Court of Appeal upheld the trial court’s ruling on the City of San Diego’s determination that one set of utilities undergrounding districts is exempt from CEQA, but remanded for further analysis of another set of utilities undergrounding districts to determine whether the project’s greenhouse gas (GHG) emissions are consistent with the City’s Climate Action Plan (CAP). (McCann v. City of San Diego (2021) ___ Cal.App.5th ___ (Case No. D077568).)
The City of San Diego adopted a Utilities Undergrounding Program Master Plan in 2017, which sets out a process by which the City is converting overhead utility wires to an underground system. Undergrounding includes digging tunnels or trenches, installing underground conduit, filling in the soil, and pulling cable through the conduit. In addition, the City installs new above-ground transformers, three-foot cube-shaped cable boxes, and pedestals. The Master Plan and the City’s Municipal Code divide the larger effort to convert the entire above-ground utility system into smaller “districts,” each of which the City considers and approves separately.
Margaret McCann, a property owner, challenged the City’s approval of two sets of districts. The first set, City staff determined, was exempt from CEQA pursuant to Guidelines section 15302, subdivision (d). For the second set, the City adopted a mitigated negative declaration (MND).
The exempt districts
City staff determined that the first set of districts is exempt from CEQA. The City posted a Notice of Right to Appeal Environmental Determination in its City Development Services Department Office and on its website, and emailed the notice to City Councilmembers and local community planning groups. The notice stated that the exemption determination was appealable to the City Council within ten days. No one appealed. The City Council subsequently mailed notice of a public hearing regarding the districts to affected property owners, including McCann. McCann emailed the City and indicated that she had not seen the Notice of Right to Appeal, and that she believed the environmental review was inadequate. Her attorney also spoke at the Council hearing. The City Council subsequently approved the projects and the City filed a Notice of Exemption.
The MND districts
Separately, the City published a draft MND for another set of undergrounding districts, because some of them included sites with cultural significance. The MND also considered potential aesthetic and GHG effects from the projects. McCann and her attorney submitted written comments disputing the adequacy of the MND, and McCann’s attorney spoke at the public hearing. The City Council adopted the MND and approved the undergrounding districts.
Trial court decision
McCann filed a petition challenging both the exempt districts and the MND districts. The trial court denied the petition in its entirety. With respect to the exempt projects, the trial court found that McCann failed to exhaust administrative remedies, and in the alternative, denied her claims outright. Regarding the MND projects, the trial court found that McCann failed to demonstrate that substantial evidence supported a fair argument that the projects may have a significant effect on the environment.
The Court of Appeal’s Decision
The Court of Appeal agreed with the trial court, with one exception. First, with respect to the exempt projects, the court explained that CEQA does not prescribe a specific appeal process following a determination that a project is exempt. But, the court said, CEQA does require that if a nonelected official or decisionmaking body determines that a project is exempt, the agency must allow for an appeal of that determination to the decisionmaking body. Here, the City provided an administrative appeal process, but McCann did not file a timely appeal pursuant to the City’s procedures. McCann argued that City staff’s exemption determination did not comply with due process principles, but the court disagreed because the determination was not a land use decision and did not deprive McCann of any significant property interest. As a result, the court concluded, McCann failed to exhaust her administrative remedies, barring her claims with respect to the exempt projects.
Second, with respect to the MND projects, the Court of Appeal rejected all but one of McCann’s arguments. McCann argued that the City improperly segmented the projects; the court disagreed because each utility underground district is independently functional and does not rely on other districts to operate, and no set of districts is the “first step” toward any other projects. McCann argued that the project description was inadequate because it did not identify the precise locations of above-ground transformer boxes; the court disagreed because regardless of the precise location of each transformer, the environmental impacts of the project are the same. McCann argued that the MND projects will have significant aesthetic effects on the environment; the court disagreed because McCann failed to meet her burden to identify substantial evidence in the record that the project might have significant impacts. Most of McCann’s arguments, the court said, revolved around her neighborhood, which falls under the exempt projects, not the MND projects. McCann also cited to testimony of a person who commented on the project, but the court concluded that stray comments or expressions of concern related to aesthetic impacts are not enough to constitute substantial evidence.
The Court of Appeal remanded to the trial court on one narrow issue–the City’s determination that GHG impacts are not significant. Interestingly, the court explained that it was not holding that McCann proved that substantial evidence supported a fair argument that the project might have significant GHG impacts, which is usually the standard of review applied by the courts when considering an MND. Instead, the court said that because the City relied on an inapplicable checklist to conclude that the project was consistent with the City’s CAP, the City’s conclusions were not supported by substantial evidence.
To determine whether the project is consistent with the CAP, the City looked to its “Climate Action Plan Consistency Checklist.” The checklist directs staff to first consider whether a project is consistent with the City’s land use and zoning regulations. If yes, staff must then move to step two. But the checklist explains that step two does not apply to projects that, like this one, do not require a certificate of occupancy. Because step two does not apply, the City concluded that the project was consistent with the CAP. The court found, though, that the City could not rely on a checklist which expressly states that it does not apply to projects like this one to make a consistency determination. Thus, the court concluded, the City never considered whether the MND projects are consistent with the CAP. The court clarified that the use of a checklist to determine consistency might still be appropriate; the City could amend the checklist to include a step for assessing infrastructure projects, or it could create a separate checklist entirely. Without such a checklist though, the City was required to consider whether the projects comply with each individual action identified in the CAP if it wished to rely on streamlined review of GHG impacts.
The Court of Appeal reversed the trial court’s judgment on this limited issue, with directions to the trial court to enter a new judgment granting the petition in part, and to issue a peremptory writ of mandate directing the City to set aside its adoption of the MND and approval of the project.