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President Trump Executive Order Aims At Revising EPA Waters of The United States (WOTUS) Rule

Monday, July 24th, 2017

On February 28, 2017, President Trump singed an executive order (“Order”) intended to roll back a rule promulgated by the U.S. Environmental Protection Agency (“EPA”) and U.S. Army Corps of Engineers (“Corps”) (collectively “Agencies”) under the Clean Water Act (CWA), known as the Waters of the United States (WOTUS) Rule (“Rule”). Noting that EPA can regulate “navigable waters,” waters that truly affect interstate commerce, the President announced that the Order would direct EPA to take action, paving the way for the elimination of this “very destructive and horrible rule.”

On March 6, 2017, the Agencies published in the Federal Register a Notice of Intent to review and rescind or revise the Rule in response to the Order. The Rule, which was issued under the Obama administration and became effective on August 28, 2015, defines “waters of the United States” to clarify CWA jurisdiction based on science and several U.S. Supreme Court cases. These cases addressed the federal government’s jurisdiction over activities affecting the wetlands, rivers, and streams that fed into “navigable waters,” which are defined as “waters of the U.S.” and regulated under CWA.

After the Rule was issued in 2015, numerous states, farmers, and industry groups filed lawsuits to enjoin the Rule, claiming that the Rule would dramatically expand the federal agencies’ regulatory jurisdiction. On October 9, 2015, the U.S. Court of Appeals for the Sixth Circuit in In re: EPA, 803 F.3d 804 (6th Cir. 2015), stayed the Rule nationwide, pending the court’s resolution of an issue related to the court’s jurisdiction over the case.

The Order directs the Agencies to initiate the process of rescinding or revising the Rule. The Order first directs the Agencies to review the Rule for consistency with the policy of keeping the Nation’s navigable waters free from pollution and at the same time promoting economic growth and minimizing regulatory uncertainty. Then, it directs the Agencies to publish for notice and comment a proposed rule rescinding or revising the Rule.

In addition, the Order also directs the Agencies and the heads of all executive departments and agencies to review all orders, rules, regulations, guidelines, or policies implementing or enforcing the Rule, and rescind or revise them to reflect any changes made to the Rule. Further, the Order requires that the Agencies take appropriate action concerning any litigation before the federal courts.

Finally, the Order requires that the Agencies interpret the term “navigable waters” in CWA in a manner consistent with Justice Scalia’s plurality opinion in Rapanos v. United States, 547 U.S. 715 (2006). The opinion, in which Justices Roberts, Thomas, and Alito joined, interpreted the term “waters of the U.S.” as “relatively permanent, standing or flowing” bodies of water “connected to traditional interstate navigable waters” as well as wetlands with a “continuous surface connection” with such waters. The plurality seemed to support narrower CWA jurisdiction than Justice Kennedy’s concurring opinion in Rapano, based on which the Rule was developed. Justice Kennedy’s opinion suggested that the term “waters of the U.S.” encompasses wetlands that possess a “significant nexus” to navigable waters.

Given the Rule’s extensive nationwide impact, any revision to the Rule will likely be challenged in court by stakeholders. Any change to the Rule requires the Agencies to comply with the notice and comment requirements under the federal Administrative Procedures Act. Stakeholders affected by the revision to the Rule should participate in the forthcoming notice and comment procedures. Thomas Law Group will closely monitor the notice and comment procedures associated with the Order.

California Supreme Court Holds EIRs Must Analyze Impacts to ESHA

Monday, July 24th, 2017

In Banning Ranch Conservancy v. City of Newport Beach, (2017) 2 Cal.5th 918, the California Supreme Court unanimously held that the City’s EIR prepared for the Newport Banning Ranch (NBR) project was inadequate, finding that it failed to identify potential “environmentally sensitive habit areas” (ESHAs) under the California Coastal Act (“Act”) and analyze the project’s impacts to those areas.

The Banning Ranch site is an undeveloped, 400-acre plot of land containing oil field facilities and wildlife habitat. The project site, located in the City’s “sphere of influence,” falls in the “coastal zone” under the Act. NBR proposed to develop the site with up to 1,375 residential units, 75,000 square feet of retail, and 75 hotel rooms.

After the City announced in its notice of preparation that the project site included areas that might be defined as ESHAs, numerous public comments were submitted urging the City to discuss potential ESHAs in the EIR. The City refused to do so, contending that it had no legal authority to determine if the areas were ESHA, despite the fact that it knew that the California Coastal Commission (“Commission”) staff had preliminarily determined that the project site contained ESHAs.

In July 2012, the City certified the FEIR and approved the NBR project master plan. Subsequently, Banning Ranch Conservancy (BRC) challenged the project approval, raising two issues. First, BRC claimed that the EIR failed to identify areas that might qualify as ESHAs and account for those areas in its analysis of project alternatives and mitigation measures. Second, BRC contended that the City violated its obligation under the general plan to work with the Commission to identify wetlands and habitats to be protected from development.

The trial court rejected BRC’s CEQA claim, but found that the City had not complied with their general plan obligations. The Fourth Appellate District affirmed on the CEQA issue, but reversed on the trial court’s general plan findings because the general plan did not require the City to work with the Commission before project approval.

Reversing the Fourth Appellate District’s holding related to BRC’s CEQA claim, the Supreme Court held that CEQA requires an EIR to identify areas that might qualify as ESHAs. Further, rejecting the City’s argument that CEQA imposes no duty to consider the Act’s ESHA requirements, the Court noted that the lead agency should integrate CEQA review with its project approval process. In addition, the Court held that an EIR must lay out any competing views put forward by the lead agency and other interested agencies. Finally, the Court held that it did not need to address the general plan issue because BRC was found to be entitled to relief on its CEQA claims.

Key Point:

The lead agency must identify a potential ESHA through consultation and discuss their ramifications for mitigation measures and project alternatives in the EIR when there is credible evidence that an ESHA might be present on the project site. The Court provided that whether an EIR has omitted “essential information” is a procedural question subject to de novo review, without clarifying exactly what is deemed “essential information” required to be analyzed under CEQA. Thus, the Court’s holding in this case raises a question of whether an EIR must address other similar statutory schemes relevant to the project, such as the California Fish and Game Code, the California and federal Endangered Species Acts, the federal Clean Water Act, and other statutory requirements administered by the responsible, trustee, or interested agency.

Third Appellate District Upholds CARB’s Cap-And-Trade Program

Monday, July 24th, 2017

In California Chamber of Commerce, et al., v. State Air Resources Board, et al. (2017) 10 Cal.App.5th 604, the Third Appellate District affirmed the trial court and rejected challenges to a cap-and-trade program developed by the State Air Resources Board (“CARB”) under the California Global Warming Solutions Act of 2006 (“AB 32”).

The program imposes a “cap” on the total amount of GHG emissions from regulated entities, which mostly consist of large GHG emitters. CARB lowers the cap over time to reduce the total emissions and issues allowances, the total value of which is equal to the amount of the cap.

Regulated entities receive these allowances – either through auction, from CARB for free, or a combination of both – or purchase “emission offsets,” credits generated from voluntary emission reductions made outside the capped entities, and surrender an allowance for each ton of emissions they release. If a regulated entity does not need all of the allowances it has in a given period, it may bank them to surrender later or sell them to another registered party. Non-covered entities may buy allowances, either to speculate, or to retire them and reduce emissions.

Business groups filed the suit, arguing that the auction sales exceeded CARB’s authority under AB 32, and that the revenue generated by the auction sales amounted to a tax subject to Proposition 13, which requires any new tax to be passed by a supermajority vote of each house of the state legislature.

First, the court held that CARB did not exceed its authority in designing the cap-and-trade auction program because the legislature had given broad discretion to CARB to design a system including an auction style, market-based mechanism for reducing GHG. The court noted that even if AB 32 had not authorized CARB to adopt the auction program, the legislature ratified it in 2012 through passage of four bills specifying how auction proceeds would be used to effectuate AB 32.

Second, the court held that the revenue generated by the auction sales was not a tax subject to Proposition 13, based on what the court deemed as two “hallmarks” of a tax: (1) it is compulsory; and (2) it does not grant any special benefit to the payer. The court found that participation in the program was voluntary. According to the court, this is because an entity would not have to obtain extra allowances or offset credits unless it chooses to pollute beyond the level of allowances it receives from CARB for free. The court also found that the allowance credits, unlike taxes, would grant benefits to the payers as they were valuable commodities tradable between private parties.

Finally, the court held that the test used to determine whether regulatory fees were taxes in Sinclair Paint Company v. State Board Of Equalization (1997) 15 Cal.4th 866 (Sinclair Paint), which was applied by the trial court, did not control this case. The court explained that the auction system that set up a revenue generating measure at hand was entirely different than a regulatory fee.

In a 13-page dissent, Justice Hull agreed that CARB did not exceed its authority under AB 32, but argued that the cap-and-trade auction program was compulsory and a tax, because covered entities currently in California would be compelled to buy allowances if they were to remain in California. Justice Hull also questioned the majority’s characterization of the auction credits, noting that the value of the auction credits would be ephemeral, given that the state could at its sole discretion limit or terminate them. 

Key Point:

The new test set by the court for assessing whether the cap-and-trade auction program is a tax is far from clear. The majority and Justice Hull disagreed on what “compulsory” meant under the test. On June 28, 2017, the California Supreme Court denied the petitions for review of the Third Appellate District’s decision.

Proper CEQA Baseline for a Project Normally is the Conditions Existing When the Environmental Review of the Project Commences

Monday, July 24th, 2017

In Poet v. State Air Resources Board (2017) 12 Cal.App.5th 52, the Fifth Appellate District held that the Air Resources Board (ARB) violated several procedural requirements imposed by the California Environmental Quality Act (CEQA) and the California Administrative Procedure Act (APA) through noncompliance with a previous writ compelling the agency to address its NOx emissions from biodiesel in accordance with the California Global Warming Solutions Act of 2006 and its subsequent low carbon fuel standards (LCFS).

Upon the adoption of the California Global Warming Solutions Act of 2006, which sought to reduce greenhouse gases to 1990 levels by 2020, ARB adopted LCFS regulations. ARB sought to adhere to these LCFS regulations and reduce greenhouse gas emissions by promoting the use of biodiesel as a substitution or blend with petroleum-based diesel fuel. However, ARB failed to analyze potential increases in the emission of NOx resulting from increased biodiesel use, and the possibility of unmitigated adverse environmental consequences of promoting the alternative fuel. In the prior CEQA litigation, Poet I, the trial court issued a writ of mandate directing that:

“ARB shall address whether the project will have a significant adverse effect on the environment as a result of increased NOx emissions, make findings (supported by substantial evidence) regarding the potential adverse environmental effect of increased NOx emissions, and adopt mitigation measures in the event the environmental effects are found to be significant.”

In addressing the writ, ARB produced a set of findings and statement of overriding considerations and adopted the 2015 modified version of the LCFS regulations. The mandated environmental analysis found that while use of biodiesel may increase NOx emissions in some engines, depending on feedstock and blend level, that the total NOx emissions from biodiesel would decline from the 2014 baseline level under the proposed LCFS and alternative diesel fuel (ADF) standards. The study further concluded that the use of biodiesel was consistent with the proposed ADF and would not constitute a significant adverse impact to air quality.

In its environmental analysis, ARB adopted 2014 NOx emissions data as the baseline to conduct its study, citing that because biodiesel had only recently become incentivized in 2009 (and was used in blends with petroleum-based oils with much less frequency at that time), that biodiesel NOx emissions in 2009 were minimal and improper to use as the baseline. ARB defended its use of the 2014 data, citing that use of earlier data would be misleading, was not required by law, and was not required by the writ issued in Poet I.

In November 2015, ARB filed its return to the February 2014 writ. POET challenged the return arguing that ARB failed to consider the original LCFS regulation, and that it was inappropriate to use the 2014 baseline in its environmental analysis, which allegedly allowed ARB to avoid acknowledging 2010-2015 NOx emission increases caused by the original LCFS regulations. Additionally, POET criticized ARB for skewing analysis of the impact of NOx emissions by comparing predicted future emissions to a baseline made higher by the original LCFS regulations. Additionally, ARB objected to the return on the grounds that it violated the third paragraph of the writ by assuming that the effect of the original LCFS regulation was not an environmental impact attributable to the project as a whole.

In January 2016, the trial court filed an order discharging the 2014 writ, and found ARB satisfactorily responded to the writ. Upon appeal, the appellate court reversed this discharge, finding that while ARB addressed NOx emissions from biodiesel pursuant to the third paragraph of the 2014 writ, it misconstrued the term “project” and erroneously determined the original LCFS regulations were not part of the “project.”

The appellate court held that ARB’s misinterpretation of the term “project” was not objectively reasonable, that the remedial actions taken in response to the writ of mandate did not appear to be a sincere attempt to provide the public and decision makers with the information required by CEQA. Further, the court held that the baseline for a primary environmental analysis under CEQA must ordinarily be the actually existing physical conditions, rather than hypothetical conditions that could have existed under applicable permits and regulations, and held that the correct baseline would be the data from the environmental conditions before the 2009 LCFS regulations were instated.

The appellate court concluded that most of ARB’s corrective action in response to the February 2014 writ satisfied a subjective good faith standard, but the part of ARB’s corrective action addressing NOx emissions from biodiesel did not. Further, the court held that since 2009, ARB has been in violation of CEQA because its environmental disclosure documents have not provided the public with statutorily required information about the project’s NOx emissions. As a result, the court found that ARB’s corrective action taken in reliance on those environmental disclosure documents did not comply with CEQA.

Subsequently, the order discharging the 2014 peremptory writ of mandate was reversed. The superior court was directed to vacate the previous order and enter a new order stating that ARB’s return did not demonstrate compliance with the third paragraph of the peremptory writ of mandate.

In its discussion of remedial action, the appellate court severed the ADF regulations and the 2015 LCFS regulation, citing that the ADF regulations were not tainted by the continuing CEQA violations. Further, the court found that suspending the diesel provisions of the LCFS regulations would result in adverse environmental impacts due to the increased emissions of greenhouse gases, and elected to leave the LCFS regulations in place, deeming it would provide more protection for the environment than suspending their operation pending ARB’s compliance with CEQA; citing that the possibility that the use of biodiesel during the interim would produce more NOx emissions (than the petroleum-based diesel it replaces) does not justify nullifying all LCFS regulation while waiting for proper compliance with the CEQA.

Key Point:

Where a proposed project commences during CEQA litigation, if a writ of mandate is issued that directs the lead agency to conduct further CEQA review, then baseline conditions on remand normally should be treated as the environmental conditions before the original project was approved.

California Supreme Court Grants Review of Medical Marijuana Patients, Inc. v. City Of San Diego

Wednesday, January 25th, 2017

On January 11, 2017, the California Supreme Court unanimously granted review of the Fourth Appellate District’s published opinion, Union of Medical Marijuana Patients, Inc. v. City of San Diego (2016) 4 Cal.App.5th 103.

In granting review, the Court identified the following issues:

  1. Is the enactment of a zoning ordinance categorically a “project” within the meaning of the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.)?
  2. Is the enactment of a zoning ordinance allowing the operation of medical marijuana cooperatives in certain areas the type of activity that may cause a reasonably foreseeable indirect physical change to the environment?

The Fourth District held that the enactment and amendment of the zoning ordinance did not have the potential for resulting in “a reasonably foreseeable indirect physical change in the environment,” and was thus not a project. (4 Cal.App.5th 103). More specifically, the court ruled that the impacts alleged by appellants concerning increased travel, cultivation, and development did not create a reasonably foreseeable indirect physical change in the environment because these allegations were too speculative. (4 Cal.App.5th 103, 119-124).

Third Appellate District Rejected Constitutional and CEQA Challenges to Casino/Hotel Resort Project

Thursday, January 5th, 2017

In United Auburn Indian Community of the Auburn Rancheria v. Brown (2016) 4 Cal.App.5th 36, the Third Appellate District affirmed the trial court and rejected challenges to Governor Brown’s concurrence in a determination made by the Secretary of the Interior (“Secretary”) concerning the Enterprise Rancheria of Maidu Indians of California’s (“Enterprise Tribe”) request to acquire a site in Yuba County to construct a casino/hotel resort complex on the site.

The Indian Reorganization Act (“IRA”) authorizes the Secretary to acquire land for Indians. The federal Indian Gaming Regulatory Act (“IGRA”) permits gaming on Indian lands taken into trust for the benefit of a tribe after October 17, 1988, if the Secretary determines that it would be in the best interest of the tribe and would not be detrimental to the surrounding community and the governor of the state in which the gaming activity is located concurs in the Secretary’s determination.

After the U.S. Department of the Interior (“Department”) completed its NEPA review concerning the Enterprise Tribe’s site acquisition request, the Assistant Secretary for the Indian Affairs (“Assistant Secretary”) made a determination favorable to the Enterprise Tribe. After Governor Brown concurred in the Assistant Secretary’s determination in August 2012, the plaintiff, which owned the Thunder Valley Resort and Casino located approximately 20 miles from the project site, challenged the validity of the Governor’s concurrence on the ground that it constituted an illegal exercise of legislative power.

The court rejected the plaintiff’s argument that the Governor violated the separation of powers clause in the state Constitution by exercising a legislative power when he concurred in the Secretary’s determination. According to the court, the Governor’s concurrence was an executive act because he simply performed one part of IGRA, a federal program in which the state legislature decided to participate. The court also rejected the plaintiff’s contention that the Governor impermissibly exercised a legislative power by setting land use policy or tax policy through his concurrence in the Secretary’s decision.

Without much discussion, the court also held that the Governor’s concurrence was not a project pursuant to CEQA because the Governor is not a public agency.

Key Point:  

The Governor’s concurrence in a determination made by the Secretary of the Interior under IGRA does not violate the separation of the powers clause in the state Constitution. In addition, the Governor’s concurrence in such determinations does not constitute a project because the Governor is not a public agency under CEQA.

FOURTH APPELLATE DISTRICT REJECTED CEQA CHALLENGES TO CITY OF SAN DIEGO’S MEDICAL MARIJUANA ORDINANCE

Thursday, January 5th, 2017

In Union of Medical Marijuana Patients, Inc. v. City of San Diego (2016) 4 Cal. App. 5th 103, the City enacted an ordinance adopting regulations for medical marijuana consumer cooperatives (“cooperatives”) in the City. The ordinance permits cooperatives through a conditional use permit in several zones in the City, including certain commercial and industrial zones. It allows up to four cooperatives in each of the City’s nine City Council districts and requires that cooperatives to be located 1,000 feet from public parks, churches, childcare centers, playgrounds, minor-oriented facilities, residential care facilities, schools, and other cooperatives, and 100 feet from residential zones. The ordinance defines the term “cooperative” to mean “a facility where marijuana is transferred to qualified patients or primary caregivers in accordance with the Compassionate Use Act of 1996 and the Medical Marijuana Program Act.”

After the City Council adopted the ordinance without undertaking review under CEQA, the plaintiff filed a petition for writ of mandate against the City in April 2014.

The court held that the enactment of the ordinance did not constitute a project under CEQA. The court explained that the enactment of a zoning ordinance would not constitute a CEQA project unless it might cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

The court also held that the ordinance would not result in a reasonably foreseeable indirect physical change in the environment, finding all of the plaintiff’s arguments speculative and unwarranted. First, the plaintiff contended that the ordinance, by restricting the location of cooperatives, would force patients to travel to cooperatives far from their residences, creating traffic and air pollution. Second, the plaintiff argued that patients in the City would undertake their own indoor cultivation of marijuana rather than travel to inconveniently located cooperatives and such indoor cultivation would have harmful environmental impacts, including increased electricity use. Finally, the plaintiff argued that the ordinance might result in new construction activity because the cooperatives established under the ordinance would have to be located somewhere.

Key Point:  

Not all zoning ordinances constitute a project under CEQA. Only a zoning ordinance that may cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment constitutes a project under CEQA.

FOURTH APPELLATE DISTRICT UPHELD CITY OF SANDIEGO’S SUBSTANTIAL CONFORMANCE REVIEW DECISION

Thursday, January 5th, 2017

In San Diegans for Open Government v. City of San Diego, 2016 Cal. App. LEXIS 1095, the Fourth Appellate District rejected challenges to the City of San Diego’s approval of modifications to a previously-approved master plan for a high-density, mixed-used business park. Sunroad Enterprises and Sunroad Centrum Partners L.P. (“Sunroad”) proposed the project, located on 242 acres in the Kearny Mesa area of San Diego.

In 1997, the City approved a master plan for the development and certified an EIR. The applicant modified the project in 2000 and 2002, and the City adopted an addendum to the EIR and an MND, respectively. In 2012, Sunroad obtained a permit to begin certain phases of the master plan. In 2013, Sunroad again sought City approval for project modifications through the City process known as substantial conformance review (“SCR”). The modifications included the addition of a podium level pedestrian walkway connecting the deck and pool areas of two residential buildings, the elimination of one level of parking, a reduction in bicycle spaces, and an increase in building height, but did not change the total number of units or stories above ground.

After City staff determined these modifications were consistent with the previously-certified EIR, Addendum, and MND, plaintiffs appealed the staff’s decision to the Planning Commission, and the Planning Commission denied the appeal. Subsequently, plaintiffs attempted to appeal the decision to the City Council, but the City refused to process the appeal. Plaintiffs sued the City, arguing they were entitled to an administrative appeal.

The court rejected plaintiffs’ contention that the SCR decision constituted a determination that the project “is not subject to CEQA,” which may be appealed to the City Council under Public Resources Code section 21151, subdivision (c). The court explained that the SCR decision did nothing to alter the City’s prior determination that the project was subject CEQA. The court also rejected the argument that the project required further environmental review because the SCR decision was discretionary. The court held that the conclusion that an activity is discretionary does not independently require a subsequent EIR, unless other conditions are met. Finally, the court rejected plaintiffs’ argument that staff’s SCR determination was an “environmental determination,” which may be appealed to the City Council under the City’s code.

Key Point:  

When a city staff member makes a determination that modifications to a previously-approved project are consistent with the previously-certified EIR or MND, the lead agency’s elected decisionmaking body is not required to review an appeal of that decision under CEQA.

SUPREME COURT FINDS RESIDENTIAL PROJECT INCONSISTENT WITH THE CITY OF ORANGE’S GENERAL PLAN

Thursday, January 5th, 2017

On December 15, 2016, the Supreme Court filed, Orange Citizens for Parks & Recreation v. Superior Court (2016) __ Cal.App.5th __  (2016 Cal. LEXIS 9595), a unanimous opinion finding a 39-unit residential development project proposed on 50 acres of land in the foothills of the Santa Ana Mountains could not be found consistent with the City’s General Plan.  In 1973, the City’s planning commission adopted a resolution recommending the property’s designation be amended from “Open Space” to “Other Open Space and Low Density (1 acre).”  Later in the same year, the City Council adopted the Orange Park Acre Plan, and in 1977, the City Council amended the General Plan to permit low-density residential development in Orange Park Acres, directing that the Orange Park Acre Plan be revised accordingly.  Despite these legislative actions and subsequent amendments to the City’s General Plan in 1989 and 2010, City staff never made changes to the official land use policy map in the General Plan’s land use element, and as a result the property remained designated as “Open Space” in the General Plan.

When the 39-unit residential project was proposed in 2007, the City believed that a General Plan map amendment would be required; however, the City later changed its position based on the Orange Park Acre Plan, as adopted in 1973, which permitted low-density residential uses on the site. Based on this, in June 2011, the City Council certified an EIR for the residential project and amended the General Plan to reflect the original adoption of the Orange Park Acre Plan and to clarify that low-density residential uses were permitted on the project site.

The Supreme Court held that the project was inconsistent with the City’s General Plan because none of the planning commission resolutions authorizing residential development became integrated into the Orange Park Acre Plan or the General Plan, rejecting the lower court’s finding that the General Plan included “contradictions and ambiguities” requiring deference to the City’s consistency finding. The Court seemed hesitant to give deference to the City partly because it found that no reasonable person could conclude that the property could be developed without a general plan amendment, given that the General Plan required the Orange Park Acre Plan be consistent with the General Plan policies, and that the General Plan map unambiguously designated the Property as open space.

Key Point:

Local agencies should maintain consistency among various land use documents to the maximum extent possible. A local agency should also keep the general plan updated so that reasonable persons can discern the general plan designation and policies applicable to a given piece of property.

: FIRST APPELLATE DISTRICT UPHOLDS ADEQUACY OF THE SUPPLEMENTAL EIR PREPARED FOR THE GOLDEN STATE WARRIORS NEW ARENA

Thursday, January 5th, 2017

In Mission Bay Alliance v. Office of Community Investment & Infrastructure (2016) 6 Cal. App. 5th 160, the First Appellate District affirmed the trial court’s ruling that the Office of Community Investment and Infrastructure (OCII) complied fully with CEQA in approving a proposed 488,000-square foot multipurpose event center, which would serve as the Golden State Warriors’ new arena, and a variety of mixed-use structures surrounding the event center including two 11-story office and retail buildings, parking facilities, and 3.2 acres of open space.

The litigation proceeded under CEQA’s “environmental leadership development project” procedures, which provide for expedited litigation. Specifically, these procedures state that the litigation, including any appeals, should be resolved within 270 days of certification administrative record. Despite petitioners initially filing the litigation in the wrong venue and other circumstances that delayed the proceeding, the court was nevertheless able to issue its opinion about 270 days from certification of the administrative record.

The Project was proposed in the Mission Bay South Redevelopment Plan (Plan) area of City and County of San Francisco (City). The Plan was approved in late 1998 after certification of a Mission Bay final subsequent environmental impact report (1998 FSEIR), which incorporated information from a prior 1990 FEIR for the Plan area. In approving the Project, OCII prepared a supplemental environmental impact report (SEIR) for the Project, tiered to the 1998 FSEIR.

Petitioners argued that the Project SEIR failed to comply with CEQA because issues that the initial study concluded were insignificant or adequately examined in the 1998 FSEIR, including land use, biological resources, hazardous materials, and recreation impacts, may nevertheless be significant. Petitioners alleged these challenges were subject to the “fair argument” standard of review. The court rejected Petitioners’ argument and held that the “substantial evidence” standard applies. Based on this deferential standard of review, the court rejected each of petitioners’ land use, biological resources, hazardous materials, and recreation impact challenges.

Petitioners also advanced several challenges concerning the transportation analysis. The SEIR demonstrated that the Project presented a number of traffic and congestion concerns. As a result, the Project included a transportation management plan (TMP) and transit service plan (TSP), new or upgraded traffic signals or lane configurations at 20 intersections and construction of six new street segments, as well as expansion or modification of light rail passenger platforms, sidewalks and bicycle lanes.

Petitioners argued that the Project SEIR violated CEQA by including the TSP as part of the project description rather than as a mitigation measure. The court explained that the inclusion of the TSP as part of the Project did not interfere with the identification of the Project’s transportation impacts because the SEIR included analysis both with and without implementation of the TSP, distinguishing this case from Lotus v. Department of Transportation (2014) 223 Cal.App.4th 645. Petitioners also argued that the TSP was inadequate because it may require the diversion of two streetcars from other transit lines in the City and asserted that this diversion may result in significant impacts on the lines from which the cars are diverted. The court rejected this argument as an “entirely speculative environmental impact.” The court also rejected Petitioners’ challenge to a mitigation measure requiring the Warriors to “work with” regional transit providers to provide adequate transit service. The court explained that substantial evidence in the record demonstrated that, through coordination among the regional transit agencies, transit demands in the region could be met. Furthermore, the court rejected petitioners’ demand that the Warriors guarantee transit funding in the event the traditional funding sources fell short. The court acknowledged that the SEIR did not identify specific funding sources, but held that substantial evidence in the record demonstrated that funding sources, such as fair recovery and a countywide sales tax dedication, should be available to address future transit needs.

Next, the court rejected petitioners’ argument that an “ambient plus increment” noise threshold ignores the severity of existing noise levels and is an inadequate noise threshold. The court also rejected petitioners’ claim that the SEIR must include a health-based threshold for noise. The court found that the SEIR adequately disclosed potential health impacts associated with noise and that OCII had the discretion to use an “ambient plus increment” noise threshold. The court noted that the CEQA Guidelines support use of an increment-based threshold. Additionally, the court found that the SEIR took the severity of existing noise levels into account by applying a smaller incremental noise threshold at intersections with noise in excess of 65 dBA.

Petitioners also argued that the wind analysis included in the SEIR was inadequate because it focused on wind impacts at off-site public areas rather than at onsite public areas. Citing Ballona Wetlands Land Trust v. City of Los Angeles (2011) 201 Cal.App.4th 455, 473, the court held that CEQA does not require an analysis of wind impacts on the Project. Moreover, the court concluded that a discussion of wind at onsite public areas was provided in the SEIR “for informational purposes,” which adequately addressed petitioners’ complaint concerning onsite wind impacts even if it was required.

Turning to the greenhouse gas (GHG) analysis, the court rejected petitioners’ claim that by relying on compliance with the City’s qualitative GHG Strategy the SEIR failed to disclose the magnitude of the Project’s GHG emissions and violated an alleged requirement to quantify a project’s GHG emissions. While the CEQA Guidelines provide that a lead agency “should make a good-faith effort, based to the extent possible on scientific and factual data, to describe, calculate or estimate the amount of greenhouse gas emissions resulting from a project” (quoting CEQA Guidelines section 15064.4, subd. (b)(1)), the “Guidelines do not compel a numeric estimate of every project’s greenhouse gas emissions.” Citing CEQA Guidelines section 15064.4 and 15183.5, the court explained that a lead agency may rely on a qualitative GHG analysis or performance base standards using an area wide plan. Furthermore, the court reiterated that, in Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204, the “California Supreme Court expressed approval for a methodology that uses consistency with greenhouse gas reduction plans as a significance criterion for project emissions under CEQA.”

Petitioners’ final challenge to the SEIR concerned the analysis of toxic air contaminants (TAC). Petitioners asserted that it was inappropriate to use a 100 in a million total cancer risk (from area sources) as the significance threshold for project-level TAC risk. Instead, petitioners argued that the SEIR should have used a 10 in a million project-only emission standard. Because substantial evidence supported OCII’s choice of significance threshold, the court upheld the approach used in the SEIR.

Petitioners also raised non-CEQA challenges alleging a zoning violation and that the City improperly issued a place of entertainment permit for the Project. With respect to the zoning claim, although the City’s Planning Department defined the event center as a “retail use” for the purposes of the City’s Planning Code, the court held under OCII’s Plan the bulk of the event center did not constitute a “retail use.” As to the City’s issuance of the place of entertainment permit, the court held that the City did not abuse its discretion in issuing the permit, given its finding that the Project would sufficiently protect the peaceful enjoyment of neighboring properties from the Project’s noise impacts.

Key Point:

Where an EIR is prepared, the substantial evidence standard of review applies to challenges concerning analysis included either in the initial study or the EIR. Furthermore, CEQA does not require absolute certainty regarding funding sources for mitigation measures. Finally, a lead agency may rely on a qualitative GHG analysis or performance base standards using an area wide plan.