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FIRST APPELLATE DISTRICT UPHOLDS CITY’S RELIANCE ON CATEGORICAL EXEMPTIONS, PAVING THE WAY FOR PROPOSED ASPHALT PLANT IMPROVEMENTS

Friday, August 26th, 2016

BoDean Company, Inc. (“BoDean”) operates an asphalt plant in the City of Santa Rosa. The plant is a vested and legal nonconforming use that has been in continuous operation since approximately 1953. In November 2011, BoDean proposed to install three new storage silos, ancillary conveyors, three batchers, and an air filtration system. The upgrade would have no effect on the plant’s production or production capacity due to physical limitations and a condition contained in a permit issued by the Bay Area Air Quality Management District. Although proposed upgrades would not increase the plant’s production capacity, the new silos would increase the plant’s capacity to store asphalt.

The City of Santa Rosa approved a minor conditional use permit for the improvements to the asphalt plant and filed a notice of exemption reflecting its findings that the project is exempt from CEQA under the Class 1 (existing facilities) and Class 2 (replacement or reconstruction) categorical exemptions. Petitioner Citizens for Safe Neighbors (“Citizens”) sought a writ of mandate directing the City to set aside its approval of the project for failure to comply with CEQA. In Citizens for Safe Neighborhoods v. City of Santa Rosa, 2016 Cal. App. Unpub. LEXIS 6100, an unpublished opinion, Division Three of the First Appellate District upheld the trial court’s denial of Citizens’ petition for writ of mandate.

The court first reviewed the applicability of the Class 1 categorical exemption and found that there was substantial evidence in the record that the new silos constituted a negligible expansion of the plant’s facilities. In light of its conclusion that the project falls within the scope of the Class 1 exemption for existing facilities, the court indicated it was unnecessary to consider whether the project also qualified for a Class 2 exemption.

The court then turned to Citizens’ contention that the unusual circumstances exception precluded the use of a categorical exemption. The court applied last year’s Supreme Court decision Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086 (Berkeley Hillside), which articulated the two-step analysis for determining whether the unusual circumstances exception to a categorical exemption applies to a project. The first step is to determine whether the project exhibits any unusual circumstances; an inquiry reviewed under the substantial evidence standard of review. The second step is to consider whether an unusual circumstance, if present, gives rise to a potentially significant environmental impact; an inquiry reviewed under the fair argument standard of review.

Assuming that the plant improvements presented an unusual circumstance due to its location in close proximity to residences, the court focused its analysis on the second step – whether unusual circumstances give rise to a potentially significant impact. The court concluded that the record did not contain substantial evidence to support a fair argument that the plant upgrades would increase production. Accordingly, the court rejected Citizens’ arguments that plant improvements would result in significant environmental impact on aesthetics, air quality, health & safety, noise, odor, and traffic. The court found Citizens had not met its burden to establish the applicability of the unusual circumstances exception and the project was categorically exempt from CEQA as a minor alteration to existing facilities.

SUPREME COURT DEPUBLISHES PEOPLE FOR PROPER PLANNING V. CITY OF PALM SPRINGS

Monday, August 22nd, 2016

On August 17, 2016, the Supreme Court ordered People for Proper Planning v. City of Palm Springs (2016) 247 Cal.App.4th 640 depublished.

Since the Supreme Court issued Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, five decisions have been published concerning application of the “unusual circumstances” exception set forth in CEQA Guidelines section 15300.2, subdivision (c).

In three of the decisions, the courts upheld the lead agency’s use of the categorical exemptions at issue: (1) Berkeley Hillside Preservation v. City of Berkeley (2015) 241 Cal.App.4th 943, (2) Citizens for Environmental Responsibility v. State ex rel. 14th Dist. Ag. Assn. (2015) 242 Cal.App.4th 555, and (3) Walters v. City of Redondo Beach (2016) 1 Cal.App.5th 809.

In the other two decisions, the courts determined that the lead agency failed to comply with CEQA in relying on the categorical exemptions at issue: (1) Paulek v. Western Riverside County Regional Conservation Authority (2015) 238 Cal. App. 4th 583, and (2) People for Proper Planning.  The Supreme Court has now depublished both of these decisions.  Therefore, petitioners have not prevailed in any published opinion concerning application of the unusual circumstances exception to CEQA’s categorical exemptions since publication of Berkeley Hillside. (But see Save Our Schools v. Barstow Unified School Dist. Bd. of Education (2015) 240 Cal.App.4th 128 [holding that a proposed school project failed to meet the factual requirements to qualify for the Class 14 categorical exemption].)

Our law firm previously posted two blog entries on the People for Proper Planning.  For a discussion of the original People for Proper Planning opinion, please see http://www.thomaslaw.com/blog/fourth-district-holds-that-palm-springs-general-plan-amendment-is-not-categorically-exempt-in-published-opinion/. The Fourth District later modified its opinion, as discussed at http://www.thomaslaw.com/blog/fourth-appellate-district-modifies-published-opinion-on-the-unusual-circumstances-exception-to-categorical-exemptions/.

COURT OF APPEAL UPHOLDS USE OF CLASS 3 CAT EX FOR CAR WASH/COFFEE SHOP PROJECT IN REDONDO BEACH

Tuesday, August 2nd, 2016

The City of Redondo Beach approved a conditional use permit (“CUP”) for the construction of a 4,080 square foot combination car wash and coffee shop in a commercial zone that borders a residential area (“Project”). The City found the Project exempt from CEQA under the Class 3 categorical exemption for up to four “new, small facilities or structures” that are under 10,000 square feet in an urbanized area. (CEQA Guidelines, § 15303.) Petitioners, who own homes adjacent to the proposed development, filed a petition for writ of mandate challenging the City’s use of a CEQA exemption and issuance of the CUP. In Walters v. City of Redondo Beach, 2016 Cal. App. LEXIS 605, the Court of Appeal upheld the trial court’s denial of Petitioners’ petition for writ of mandate.

Petitioners argued that a car wash did not fit within the definition of commercial buildings because it involved the installation of industrial equipment. The court noted that the definition of commercial buildings is not limited to the listed examples of a store, motel, office, or restaurant because it also includes “similar structures.” The court held that the type of business and the equipment that would be used for the Project was not substantially different from the listed examples.

The court similarly rejected Petitioners argument that the Project’s square footage was too large for the exemption. Citing Fairbank v. City of Mill Valley (1999) 75 Cal.App.4th 1243, the court held that the exemption covers one to four commercial buildings on the parcel as long as the total floor area of the building(s) does not exceed 10,000 square feet.

A Class 3 exemption can only be used if the project does not involve the use of significant amounts of hazardous substances and the surrounding area is not environmentally sensitive. Because Petitioners could not show that the surrounding area was considered environmentally sensitive or that the business used hazardous chemicals, the court determined that the Project fell within the Class 3 categorical exemption.

Next, the court considered whether the unusual circumstance exception precluded the use of a categorical exemption. As stated by the Supreme Court in Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, there are two alternative ways to determine whether the unusual circumstances exception to a categorical exemption applies to a project: (1) by proving both unusual circumstances and a reasonable probability of a significant environmental effect that is due to those circumstances; or (2) by proving that the project will have a significant environmental effect.

Applying the first alternative, the court found that there was nothing particularly unusual about the Project and noted the parcel’s past use as a car wash from 1965 until 2001. While Petitioners pointed to the loud air blowers and extensive activities that are conducted outside of the business’ structures, the court held that the general effects of operating a business cannot serve as unusual circumstances. Nor did the court find it unusual that the business was located near a residential neighborhood.

Under the second Berkeley Hillside alternative, the court considered whether Petitioners had put forward sufficient evidence that the project will have a significant environmental effect due to noise and traffic effects. The court concluded that Petitioners had not, pointing to the fact that the City had conditioned the project on compliance with the applicable noise standards  and that the City’s traffic expert had concluded that the nearby intersection currently operates as LOS A and would continue to do so after the Project.  The court noted that Petitioners had erred by focusing on whether the Project may have a significant effect, which was not enough to establish that the Project will have a significant effect. Accordingly, the court concluded that the exception did not apply and that the City properly determined that the Project is categorically exempt.

Key Point: A Class 3 categorical exemption may apply to a commercial project when the commercial business is similar to a store, motel, office, or restaurant.

IN CENTRAL VALLEY SHOWDOWN OVER ANNEXATION, THE CITY OF KINGSBURG REIGNS (MOSTLY) SUPREME

Thursday, July 28th, 2016

In 2012, the City of Kingsburg began the process of annexing approximately 430 acres of land in Fresno County, including developed land that was home to three major facilities: a glass manufacturing plant, a grape processing facility, and a raisin processing plant. The land proposed for annexation separates the City of Kingsburg from the City of Selma, which is located approximately five miles to the north.

Before approving the annexation, Kingsburg concluded that the project would not cause any significant environmental impacts with mitigation and prepared a mitigated negative declaration (MND). When Kinsgburg certified the MND in September of 2012, it also requested that the Fresno County Local Area Formation Commission (LAFCo) initiate proceedings to approve the annexation. After continuing the annexation hearing several times, LAFCo approved the annexation on July 17, 2013.The City of Selma brought two actions challenging the decision: one against Kingsburg and one against LAFCo.

The court decided City of Selma v. City of Kingsburg, 2016 Cal. App. Unpub. LEXIS 5207 in an unpublished opinion. The City of Selma had challenged the CEQA process used by Kingsburg to approve the annexation and to repeal certain design standards applicable to the annexation area that concerned the large glass manufacturer, including a requirement to place electrical and telecommunications lines underground.

The court first held that written materials relevant to the agency’s compliance with CEQA must be included in the administrative record, even if the documents were prepared after the project was approved. Next, the court affirmed the trial court and held that Kingsburg had complied with CEQA for the annexation project by preparing an MND. In doing so, the court rejected Selma’s challenges to the adequacy and scope of the water supply analysis and Kingsburg’s ability to provide fire protection to the annexed area.

Finally, the court found that Kingsburg had failed to demonstrate that the common sense exception applied to the repeal of the design standards. The court rejected Kingsburg’s argument that the existence of other standards precluded the possibility that repealing the design standards could cause significant environmental impacts. The Court also held that Kingsburg erred by failing to reference the factual record in its notice of exemption.

The Fifth Appellate District partially published its opinion in City of Selma v. Fresno County Local Agency Formation Commission, 2016 Cal. App. LEXIS 581. For various reasons, the LAFCo hearing had originally been noticed for April 10, 2013 but was continued until July 17, 2013. Selma argued that this violated Government Code section 56666, subdivision (a)’s 70-day limitation for continuances. The court agreed, but concluded that the 70-day limitation is directory rather than mandatory pursuant to section 56106.

The court contrasted this provision with Government Code section (h), a mandatory provision which requires an annexation hearing to be scheduled for a date not more than 90 days after the annexation application was received. Because the continuance provision at issue was directory rather than mandatory, the remedy was not reversal of LAFCo’s determination.  The court acknowledged that this holding made the 70-day continuance limitation “relatively toothless.”

Key Point: Failure to comply with the continuance limitation, as opposed to the initial scheduling requirement, for LAFCo annexation proceedings will not result in a reversal of the LAFCo’s determination.

FOURTH APPELLATE DISTRICT MODIFIES PUBLISHED OPINION ON THE UNUSUAL CIRCUMSTANCES EXCEPTION TO CATEGORICAL EXEMPTIONS

Thursday, July 7th, 2016

Note: the Supreme Court granted a request for depublication of this opinion on August 22, 2016. See http://www.thomaslaw.com/blog/supreme-court-depublishes-people-proper-planning-v-city-palm-springs/ 

On June 17, 2016, the Fourth Appellate District modified its recently published opinion, People for Proper Planning v. City of Palm Springs. As modified, the opinion now cites to last year’s Supreme Court decision Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086 (Berkeley Hillside), which articulated the standard of review for the unusual circumstances exception to CEQA’s categorical exemptions.

As stated by the Supreme Court in Berkeley Hillside, the determination of whether the unusual circumstances exception to a categorical exemption applies to a project consists of a two-step analysis. The first step is to determine whether the project exhibits any unusual circumstances; an inquiry reviewed under the substantial evidence standard of review. The second step is to consider whether an unusual circumstances, if present, give rise to a potentially significant environmental impact; an inquiry reviewed under the fair argument standard of review.

Before the decision was modified, it was unclear whether the court applied the two-part test in Berkeley Hillside. The modified opinion includes a footnote explaining that the City of Palm Springs did not dispute that the case presents an unusual circumstance. As a result, the focus of the decision is on the second prong – whether petitioners presented a fair argument of a potentially significant environmental impact resulting from the unusual circumstances. Because the court concluded petitioners presented a fair argument of a potentially significant land use impact, the court granted the writ. For a complete summary of the court’s analysis, please see our previous blog post at: http://www.thomaslaw.com/blog/fourth-district-holds-that-palm-springs-general-plan-amendment-is-not-categorically-exempt-in-published-opinion/

Key Point: Because the first prong of unusual circumstances analysis applies the deferential substantial evidence standard of review, to increase the defensibility of using a categorical exemption it is integral that lead agencies adopt findings that explain why a proposed project does not involve unusual circumstances.

FOURTH DISTRICT HOLDS THAT PALM SPRINGS’ GENERAL PLAN AMENDMENT IS NOT CATEGORICALLY EXEMPT IN PUBLISHED OPINION

Friday, June 10th, 2016

Note: the Supreme Court granted a request for depublication of this opinion on August 22, 2016. See http://www.thomaslaw.com/blog/supreme-court-depublishes-people-proper-planning-v-city-palm-springs/ 

In a recently published opinion, People for Proper Planning v. City of Palm Springs, 2016 Cal. App. LEXIS 407, the Fourth District reversed the trial court and held that the City of Palm Springs’s (City) general plan amendment was not categorically exempt from CEQA.

The City’s general plan previously designated the minimum and maximum density of residential units allowed in each land use zone. In 2013, the City amended its general plan to eliminate minimum density requirements for all residential zones. The City concluded that the change was exempt from CEQA based on a Class 5 categorical exemption for “minor alterations in land use limitations . . . which do not result in any changes in land use or density.” (CEQA Guidelines, § 15305.)

The City argued that the amendment would not actually result in density changes because the City had been disregarding the minimum density requirement for years, effectively creating a baseline where there were no minimum densities. The Court disagreed, holding that the baseline was the general plan itself, not the City’s pattern of practice. Therefore, the City could not rely on the Class 5 exemption because the amendment would clearly change the densities contained in the general plan.

The court held that even if the project did fall within the Class 5 exemption, the petitioner had put forward sufficient evidence that this amendment could have a significant effect on the environment by causing cumulative impacts to the City’s stock of high density, low, and moderate income housing. The opinion appears to rely on the “unusual circumstances” exception to categorical exemptions in holding that the project was not exempt from CEQA.

Surprisingly, the opinion does not mention last year’s Supreme Court decision Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, which articulated the standard of review for the unusual circumstances exception. As stated by the Supreme Court, “[e]vidence that a project may have a significant effect is not alone enough to remove it from a class consisting of similar projects that the Secretary has found ‘do not have a significant effect on the environment.’” (Id. at p. 1115, original italics.) Rather, the unusual circumstances exception must be triggered by: (1) providing substantial evidence that an unusual circumstance distinguishes the project from others in the exempt class; or (2) providing substantial evidence that the project will have a significant effect on the environment, thus presenting unusual circumstances.

Instead of citing to Berkeley Hillside, the opinion quotes Committee to Save the Hollywoodland Specific Plan v. City of Los Angeles (2008) 161 Cal.App.4th 1168 for the proposition that courts are divided on the standard of review, and then appears to apply the fair argument standard. The end result is almost certainly correct because the court stated that it would have reached the same conclusion using the substantial evidence test. However, the opinion may reinsert confusion into the proper approach to evaluating and applying the “unusual circumstances” exception despite the Supreme Court’s clear articulation of the proper inquiry in Berkeley Hillside. Accordingly, Thomas Law Group has requested depublication of the opinion.

COURT UPHOLDS CEQA EXEMPTION FINDING RODEO CONSTITUTED A NORMAL OPERATION AT AN EXISTING FAIRGROUND

Monday, November 30th, 2015

In Citizens for Environmental Responsibility v. State ex rel., the Third Appellate District affirmed the denial of a CEQA petition relating to the 14th District Agricultural Association’s and its Board of Directors’ (collectively District) use of the Class 23 categorical exemption in approving a small-scale two-day rodeo at an existing Fairground. The case was originally decided by the Third Appellate District in March 2014 and a petition for review to the Supreme Court was filed in June 2014. The Supreme Court granted petition for review in July 2014; however further action by the court in this matter was deferred pending consideration and disposition of a related issue in Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086 (Berkeley Hillside). In August 2015, review of the matter was transferred back to the Third District Court of Appeal for reconsideration in light of the decision in Berkeley Hillside.

Appellants Citizen for Environmental Responsibility, et al. argued that the exemption employed by the District was inapplicable because: (1) the rodeo project expressly included mitigation measures in the form of a Manure Management Plan, in effect acknowledging potential environmental effects; and (2) the unusual circumstances exception to categorical exemptions applies because of alleged stormwater runoff impacts.

The notice of exemption (NOE) stated that the rodeo was categorically exempt under the Class 23 exemption for “normal operations of existing facilities for public gatherings for which the facilities were designed, where there is a past history of the facility being used for the same or similar kind of purpose.” The NOE identified the Fairground as an existing facility designed for public gatherings, primarily the county fair, as well as other public events throughout the year, including equestrian and livestock events. In addition, the NOE laid out the historical operations of the fair, which have occurred annually for over a century. The NOE also recognized that the existing equestrian facilities have been in existence for at least fifty years, and equestrian and livestock activities have always been accommodated at the fair ground. The NOE concluded that there were no exceptions to the categorical exemption due to the fact that no facilities would be altered, and the project would not result in impacts on a resource of critical concern with implementation of the District’s ongoing Manure Management Plan.

With regards to the Manure Management Plan (Plan), the court applied Wollmer v. City of Berkeley (2011) 193 Cal.App.4th 1329, and recognized that the Plan was not a new measure proposed for or necessitated by the rodeo project. Rather, the Plan was a preexisting measure previously implemented to address a preexisting concern, which was formalized in writing before the rodeo project was proposed. Accordingly, the Manure Management Plan was considered part of the ongoing “normal operations” of the Fairground and use of the Plan would not disqualify the rodeo project from utilizing the Class 23 exemption. Further, the court recognized that the Plan was not proposed as a mitigation measure for this particular rodeo. Rather, the Plan was in place for decades to address ongoing manure management concerns at the Fairgrounds.

Turning to appellant’s argument that the unusual circumstances exception to categorical exemptions applies, the court applied the Supreme Court’s recent decision, Berkeley Hillside, supra, 60 Cal.4th at p. 1086, which outlines additional clarification regarding two alternative ways to establish unusual circumstances: (1) a challenger may prove an unusual circumstance distinguishes the project from others in the exempt class; or (2) a challenger may establish that the project will have a significant effect on the environment, thus presenting unusual circumstances.

The court indicated that with regards to the first alternative, the rodeo project had no unusual circumstances to distinguish it from others in the exempt class (e.g., other “normal operations” of the Fairground). The normal operations of the Fairground included at least two dozen equestrian and/or livestock events each year for at least the last three years leading up to the rodeo. The proposed rodeo did not involve more horses or livestock than were used for other events, and no changes to the facility or the operations were necessary. Moreover, the rodeo was consistent with the existing zoning and presented no unusual circumstances compared to the activities in the surrounding area. The court found that the appellants had not produced substantial evidence supporting a finding of unusual circumstances based on features related to the rodeo project, and concluded that the agency’s determination of the absence of unusual circumstances was supported by substantial evidence.

Applying the second alternative, the court recognized that the appellants made no attempt before the District’s Board or in the trial court to prove the project will actually have a significant effect on the environment. The appellants effectively argued that the rodeo project creates an environmental risk to a neighboring creek because they believed there was a reasonable possibility that the project may have a significant environmental effect on the creek. Appellants were not able to supply evidence regarding the Fairground’s operations or the neighboring creek to establish a significant effect would occur. In fact, Fairground sampling by the District demonstrated that water leaves the Fairground in a cleaner state than when it enters. The court concluded that the appellants failed to establish unusual circumstances based on substantial evidence that the project will have a significant effect on the neighboring creek.

Key Points:

Site management activities will not be considered “mitigation” where they have been place prior to a proposed action to address an ongoing concern.  This case also provides a helpful example of how to apply the Berkley Hillside analysis in determining whether the unusual circumstance exception applies to a categorical exemption.

SIXTH APPELLATE DISTRICT FINDS THAT CITY OF SANTA CRUZ FAILED TO DEMONSTRATE SUBSTANTIAL EVIDENCE SUPPORTING THE APPLICATION OF CLASS 7 AND CLASS 8 CATEGORICAL EXEMPTIONS

Tuesday, October 27th, 2015

In Save Our Big Trees v. City of Santa Cruz, 2015 Cal. App. LEXIS 942, the Sixth Appellate District held that the City of Santa Cruz (City) failed to carry its burden of demonstrating with substantial evidence that the amendment of its Heritage Tree Ordinance and Heritage Tree Removal Resolution (Project) were categorically exempt from the California Environmental Quality Act (CEQA).

To avoid having to undertake costly environmental review, City staff recommended revising the Heritage Tree Ordinance to only allow for the removal of: (1) non-native invasive heritage trees growing outside biotic resource areas; and (2) non-native invasive heritage trees growing inside biotic resource areas, following confirmation from a qualified biologist that removal would not adversely impact or degrade the existing habitat. Staff also proposed amending the Heritage Tree Removal Resolution to permit the removal of a heritage tree that “has created or is likely to create an unreasonable and substantial hardship for a private property owner such as, excessive degradation or damage to real property, an unreasonable financial or economic burden, or an adverse effect on personal health such as allergies or physical mobility.”

Staff concluded that, as modified, the Project was exempt from CEQA under the categorical exemptions set forth in sections 15307 (Class 7) and 15308 (Class 8) of the CEQA Guidelines. These exemptions apply to actions taken to assure the maintenance, restoration, or enhancement of a natural resource or the environment. In support of that conclusion, Staff noted that while the proposed revisions to the Heritage Tree Removal Resolution “may allow for the removal of additional non-native trees,” they “would not necessarily have the potential for causing a cumulative impact or significant effect on the environment” because “[t]he City is not requiring the removal of non-native invasive tree species[,] . . . [and] removing large trees is frequently financially limiting [such that] it is unlikely that the probability of large numbers of trees being removed would increase.”

In January 2013, the City’s Parks and Recreation Commission voted to recommend the proposed Heritage Tree Ordinance amendments and the Heritage Tree Removal Resolution amendments to the City Council. The Project was considered by the City Council in October 2013. One councilmember expressed concerns that the amendments would allow people to cut down more trees, rendering the Project subject to CEQA review. Regardless, the City Council approved the amendments and adopted and approved the staff’s determination that the Project was exempt from CEQA.

On review, the Court of Appeal indicated that the case centers on the first tier of CEQA review, which requires an agency to conduct a preliminary review to determine whether CEQA applies to a proposed project. Relying on Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, the Court noted that the standard for determining whether a project falls within a Class 7 and/or Class 8 categorical exemption is not whether the project will have a significant effect on the environment, but whether substantial evidence supports the determination that the project will assure the maintenance, restoration, or enhancement of the environment. The Court also noted that the lead agency bears the burden of demonstrating substantial evidence.

The Court found that the Project removes, rather than secures protections for heritage trees and that the City offered no evidence that the required replacement of trees would contribute beneficially to the urban environment in the same way as the removed heritage trees. The Court held that the City failed to carry its burden of demonstrating with substantial evidence that the Project will assure the maintenance, restoration, or enhancement of the environment and that, as such, substantial evidence does not support the application of the Class 7 or Class 8 exemptions.

Key Point:

Lead agencies have the burden of providing substantial evidence to demonstrate that their projects fall within a categorical exemption to CEQA. This case stresses the need for lead agencies to prepare robust findings with specific facts serving as the legal basis in support of their determination that a categorical exemption applies.

“No one ever said it was easy to build a project in San Francisco”

Monday, September 28th, 2015

On September 17, 2015, the California First District Court of Appeal struck another blow to the beleaguered 8 Washington Street Project in Defend Our Waterfront v. California State Lands Commission, 2015 Cal. App. LEXIS 817, when it upheld the trial court’s ruling that a necessary land transfer between the State Lands Commission and the City of San Francisco did not qualify for an obscure CEQA exemption.

Developers San Francisco Waterfront Partners II, LLC and Pacific Waterfront Properties LLC have been attempting to build luxury condominiums on waterfront land near the San Francisco Ferry Building for almost a decade. In 2012, the project seemed to be on track. The Planning Commission certified the project’s FEIR, the Board of Supervisors affirmed the certification, and the developers were issued a conditional use authorization. At that point, only one hurdle remained—removing the public trust restrictions from the waterfront land.

The site for the project includes a parcel of property commonly referred to as “Seawall Lot 351,” which includes a public trust restriction due to the fact that the area was previously submerged land under the San Francisco Bay. To allow the development to proceed on Seawall Lot 351, the developer and the City devised a plan to transfer the lot out of the public trust and replace it with a different parcel of property pursuant to a land exchange agreement with the State Lands Commission. In August 2012, the State Lands Commission approved the land exchange agreement and found that the agreement is a statutorily exempt activity under CEQA pursuant to Public Resource Code section 21080.11.

Defend Our Waterfront (DOW) challenged the State Lands Commission’s reliance on the exemption. In early 2014, the trial court held the exemption was inapplicable and invalidated the land transfer.

On appeal, the First District upheld the lower court’s ruling. The Court began by rejecting State Lands Commission’s argument that DOW failed to exhaust their administrative remedies. DOW formed after the State Land Commission’s decision to approve the land swap. The State Lands Commission argued that Public Resources Code section 21177, subdivision (c), requires that a member of the after-formed organization must have raised the CEQA issue during the agency proceeding. The Court did not reach the merits of this argument because it determined that the State Lands Commission had provided inadequate notice of the meeting in violation of section 21177, subdivision (e), excusing DOW from the exhaustion requirement.

Specifically, the Court held that a meeting agenda posted on the State Lands Commission’s website stating that the land exchange agreement would be discussed, with no mention of CEQA, was insufficient to give the required notice that the project would be approved based on a statutory exemption. A hyperlink to a staff report that mentioned the CEQA exemption was added prior to the meeting; however, the Court found the extra step of clicking on the hyperlink to be inadequate notice and regardless, the link to the staff report was not added at least 10-days’ prior to the meeting as required under Government Code section 11125, subdivision (a). The Court further held that actual notice of the meeting/staff report did not satisfy CEQA’s notice requirement, nor was the notice requirement waived when one of DOW’s members’ failed to object to the exemption at the meeting.

On the merits of the challenge, the Court held that the Public Resource Code section 21080.11’s exemption for “settlements of title and boundary problems by the State Lands Commission and to exchanges or leases in connection with those settlements” applied only to instances where the State Lands Commission exercised its authority to settle land disputes. The Court rejected the State Lands Commission’s argument that it applied to title “problems” generally, finding that it was not required to defer to the State Lands Commission’s interpretation of the exemption because construing the scope of the CEQA exemption was a matter of “statutory interpretation” subject to de novo review.

Key Point:

The public must have sufficient notice under section 21177, subdivision (e), to trigger the exhaustion requirements. The notice must clearly state if any CEQA determinations will be discussed at the meeting and that statement must be in the notice itself, not in a hyperlinked document. This case also made clear that actual notice or waiver is no substitute for those notice requirements.

Paulek is Dead… Long Live Berkeley Hillside

Monday, September 14th, 2015

The California Supreme Court has depublished the Fourth Appellate District’s June 17, 2015 opinion in Paulek v. Western Riverside County Regional Conservation (2015) 238 Cal.App.4th 583 (Paulek).

The Paulek opinion erroneously stated that “when determining whether a categorical exemption applies, the question is whether a fair argument has been made that the project will have a significant effect on the environment.” (Id. at p. 605 [citing Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1099 (Berkeley Hillside)].) Berkeley Hillside does not stand for this proposition.

Two steps are required to determine whether a categorical exemption applies to a project. The first step is to determine whether the project fits within a categorical exemption; the second step is to consider whether an exception to the exemption applies.

With respect to the first step, published “authorities are in agreement that ‘the substantial evidence test governs . . . [a court’s] review of the [lead agency’s] factual determination that a project falls within a categorical exemption.’” (Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006) 139 Cal.App.4th 249, 267.)

Berkeley Hills addressed the second step, specifically whether the “unusual circumstances” exception to categorical exemptions applied. The California Supreme Court determined that courts should apply the fair argument standard to the question of whether unusual circumstances caused a “reasonable possibility that the activity will have a significant effect on the environment.” (60 Cal.App.4th at p. 1114.) However, on the threshold question of whether the agency faced “unusual circumstances,” the Court held that the deferential substantial evidence standard should be applied. (Id.)