Thomas Law Blog

CEQA Updates

Keeping You Up-to-Date on the California Environmental Quality Act

Uncategorized Posts


FEDERAL DISTRICT COURT HAS JURISDICTION OVER CORPS’ CEASE AND DESIST LETTER WHEN CONSTITUTIONAL CLAIMS ARE RAISED

Thursday, July 28th, 2016

In Duarte Nursery, Inc. v. United States Army Corps of Engineers, 2016 U.S. Dist. LEXIS 76037, the Eastern District of California granted the U.S. Army Corps of Engineers’ (“Corps”) motion for summary judgment, finding that Duarte Nursery (“Nursery”) had violated the federal Clean Water Act (“Act”) by moving dirt around its property as part of tilling activities. The Act generally prohibits the discharge of pollutants into “navigable waters,” or “waters of the U.S.,” without a permit.

The Nursery owned approximately 2,000 acres of land. Prior to purchasing the land, Nursery president John Duarte was aware of a draft delineation that had been prepared. The draft delineation noted that there were 40.78 acres of pre-jurisdictional waters of the U.S. on the property, including vernal pools, seasonal wetlands, and intermittent and ephemeral drainages that have physical connections to Coyote Creek, a tributary of the navigable Sacramento River. In 2012, the Nursery arranged to have wheat grown on the property. The planting process involved tilling the soil with a harvester with a ripper attachment.

An employee of the Army Corps observed the equipment and activities taking place on the property and informed John Duarte that the ripping activity potentially violated the Act. The Corps then sent a cease and desist letter (“C&D Letter”) to the Nursery in February 2013. In October 2013, the Nursery and its president sued the Corps, raising due process claims under the Fifth Amendment and the Corps asserted an enforcement action as a counterclaim.

In deciding the parties’ cross-motions for summary judgment, the court first rejected the government’s argument that the C&D Letter was not subject to judicial review under section 702 of the Administrative Procedure Act (“APA”) because it was not a final agency action. The court held that a party could seek judicial review of an agency action that was not a “final agency action” when a party raised constitutional challenges to the agency action. Additionally, the court noted that the Supreme Court found cease and desist orders issue under the Act to be sufficiently final to trigger APA review in Sackett v. EPA (2012) 132 S.Ct. 1367, 1374.

Next, the court rejected the plaintiffs’ procedural due process claim under the Fifth Amendment because the C&D Letter, which merely advised plaintiffs that their activity was in violation of the Act, did not deprive plaintiffs of their constitutionally protected interest. The court reasoned that a deprivation of a constitutionally protected interest could occur only after an enforcement action was brought by the DOJ or EPA; threatened enforcement of a deprivation of a liberty or property interest was not enough.

Finally, the court held that Nursery, including its president John Duarte, had violated the Act because they discharged soil into waters of the U.S. without a permit. The court held that a corporate officer who directs the activities could be subject to a civil enforcement action under the Act. The court also rejected the plaintiffs’ contention that the tilling activity was exempt under the Act’s farming exemption because there was no farming activity other than grazing on the property between 1998 and 2012 and the exception only applied to the continuation of established and ongoing farming activities. Moreover, the court found that the tilling activity impaired the flow of the waters of the U.S., necessitating a permit even if the farming exception did apply.

ARMY CORPS’ “APPROVED” JURISDICTIONAL DETERMINATIONS CAN BE CHALLENGED IN FEDERAL COURT

Tuesday, June 14th, 2016

In United States Army Corps of Engineers v. Hawkes, 578 U.S. __ (2016), the U.S. Supreme Court affirmed the Eighth Circuit and held that an approved jurisdictional determination (“JD”) issued under the federal Clean Water Act (“Act”) by the U.S. Army Corps of Engineers’ (“Corps”) is a final agency action that can be challenged in federal court. The Act’s Section 404 prohibits the discharge of dredged or fill material into jurisdictional “waters of the United States” without a Section 404 permit from the Corps. A JD provides property owners with the Corps’ determination as to whether a property contains a water of the U.S. Note, the ruling applies only to “approved” JDs and not “preliminary” JDs, which simply advise a property owner that there may be waters of the U.S. on the property.

In December 2010, Hawkes and two other companies (“Respondents”) applied to the Corps for a Section 404 permit to mine peat on their 530-acre parcel in Marshall County, Minnesota. Peat, an organic material that forms in wetlands and bogs, is used for soil improvement, fuel, and to provide structural support and moisture for golf greens.

In February 2012, the Corps issued an approved JD stating that the property contained a water of the U.S. because its wetlands had a significant nexus to the Red River of the North, located approximately 120 miles away. Respondents appealed the JD to the Corps’ Mississippi Valley Division Commander, but the Corps merely reaffirmed its original conclusion. Respondents then sought judicial review of the JD under the Administrative Procedure Act (“APA”) as a final agency action.

The Court held that the JD constituted a reviewable “final agency action” because (1) the JD marked the consummation of the agency’s decisionmaking process and (2) the JD also gave rise to direct and appreciable legal consequences: It deprived Respondents of a five-year safe harbor from enforcement proceedings by the Corps and EPA under the Act, which would have been provided by a determination that the parcel did not contain a water of the U.S. The Court further held that the JD was reviewable under the APA because Respondents had no adequate alternatives to judicial review. Finally, the Court rejected the Corps’ argument that approved JDs should not be subject to judicial review because the determinations are not required by the Act but are voluntarily made by the Corps.

While the notably brief opinion was unanimous, Justice Kennedy filed a concurring opinion, in which Justices Thomas and Alito joined, which noted that the Act continued to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property. Justices Ginsburg and Kagan also wrote separate concurring opinions.

Key Point:

The ruling is positive news for property owners as they can now challenge “approved” jurisdictional determinations without having to wait for their day in court until an enforcement proceeding occurs or the “arduous, expensive and long” permitting process ends. This should be particularly reassuring given the complex nature of these determinations. After Rapanos v. United States (2006) 547 U.S. 715, the Corps and EPA attempted to clarify the test for determining Waters of the U.S. in a controversial final rule that has been challenged by multiple states. However, because approving JDs is not required by statute, the benefits of this ruling may be limited if, in order to avoid litigation, the Corps stops issuing approved JDs as part of the Section 404 permitting process.

NINTH CIRCUIT REJECTS CHALLENGES TO UPDATE OF PRESIDIO TRUST MANAGEMENT PLAN

Tuesday, February 2nd, 2016

In Presidio Historical Association v. Presidio Trust, 2016 U.S. App. LEXIS 1287, the Ninth Circuit affirmed the district court’s grant of summary judgement in favor of the Presidio Trust and rejected challenges to a planned “lodge” adjacent to the Presidio’s Main Parade Ground.

The Presidio is managed by the Presidio Trust (“Trust”), a federal government corporation created by the Presidio Trust Act (“Act”) of 1996. The Trust’s actions are guided by the Act, the Golden Gate National Recreation Area Act, and the National Historic Preservation Act. These statutes charge the Trust with preserving the historic character of the Presidio while also becoming financially self-sustaining. To this end, the Trust created the Presidio Trust Management Plan in 2002. The 2011 formal plan update (“Update”) included plans to develop a 70,000 square-foot lodge, which was to be offset by the demolition of 94,000 square-feet of existing buildings.

Section 103(c) of the Act grants authority to the Trust to demolish structures that cannot be cost-effectively rehabilitated and provides for subsequent new construction that is “limited to replacement of existing structures of similar size in existing areas of development.” The Court’s decision centered on the interpretation of this provision. The Trust proffered that this provision unambiguously allowed “banking” of demolished building square-footage that could be used to offset new construction throughout the park. Conversely, the Historical Association asserted that the statute unambiguously requires a building-by-building approach—i.e., that a demolished building must be replaced by a building of roughly the same size in roughly the same place.

The Court applied Chevron deference to the Trust’s interpretation, holding the statutory provision’s plain text is ambiguous but that the Trust’s interpretation was not a permissible construction of the statute. As a backup argument on appeal, the Trust also advanced a narrower interpretation that would require new development to be in the same general area as any previously demolished buildings. The Court rejected this “banking lite” interpretation as a “litigation tactic” that was not entitled to Chevron deference and was unpersuasive under Skidmore deference.

As a result, the panel engaged in its own statutory interpretation and held “replacement of existing structures of similar size in existing areas of development” included the lodge building at issue, but refused to delineate the outer bounds of this statutory provision. It emphasized the importance of physical proximity of the new and old buildings, as well as the usefulness of the square-footage metric.

The Court also rejected a challenge arising under the National Historic Landmark Act’s section 110(f) mandate that the Trust “to the maximum extent possible undertake such planning and actions as may be necessary to minimize harm to the landmark.” The Court held that this provision was procedural only and did not impose any substantive restrictions on the Trust. Accordingly, the Trust’s extensive public outreach, meetings, consultations, and subsequent modifications to the project satisfied this mandate and served as evidence of a full and reasoned decision making process.

Key Point:

The weight of an agency interpretation will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all of those factors which give it power to persuade.

Court Upholds Monetary Fines Ordered by Trial Court for Violation of Williamson Act Contract

Wednesday, July 22nd, 2015

The action in County of Humboldt v. McKee, 2015 Cal. Unpub. LEXIS 4177, began when plaintiffs Humboldt County (County) sued Robert McKee and Buck Mountain Ranch Limited Partnership (collectively McKee). The original litigation (McKee I) involved McKee’s purchase of a property in Humboldt County which he then subdivided and sold. The property was an “agricultural preserve” under the Williamson Act.

In a lengthy unpublished decision, the court upheld the trial court’s decision finding McKee violated County guidelines and the applicable Williamson Act Contract (Contract).  Among other holdings, the court explained “the Williamson Act does not require local governments to permit temporary nonuse of agricultural preserves; the Contract and County guidelines did not permit McKee’s specific activities on the Preserve during cessation of livestock grazing; and the Williamson Act does not preclude local governments from imposing fines or penalties for violations of the act or violations of local guidelines and contracts adopted pursuant to the act.”

With respect to the issue of fines and penalties, the court upheld the trial court’s imposition of $199,100 in penalties against McKee as authorized under the County guidelines and unfair competition law.  McKee argued that the Williamson Act restricts remedies for violations of the Act to contractual remedies, and does not provide for penalties. The court disagreed, noting that, when considering the overall statutory scheme of the Williamson Act, the act does not preclude noncontractual remedies.

Court Agrees with City of San Diego’s Interpretation of its Municipal Code

Monday, June 15th, 2015

In Save Our Heritage Organisation v. City of San Diego 2015 Cal. App. LEXIS 462, Plaintiffs challenged the City of San Diego’s (City) approval of a revitalization project that would result in significant impacts to a bridge that has been designated as a National Historic Landmark. The Fourth District Court of Appeal denied all of plaintiff’s arguments and upheld the City’s approval of the project.

The Court of Appeal defined the “pivotal issue” of this case as the proper interpretation of Municipal Code section 126.0504, subdivision (i)(3). Section 126.0504 provides that when the City plans to develop on a site that may result in significant impacts on resources, it must obtain a Site Development Permit. Subdivision (i)(3) of that section requires the City to find that there is no reasonable beneficial use of the property without the project.  Plaintiff challenged the City’s findings made under section 126.0504, subdivision (i)(3), arguing the City failed to provide substantial evidence supporting its decision.

Courts apply rules relating to statutory interpretation in evaluating a municipality’s interpretation of its Code.  Thus, the Court of Appeal afforded deference to the City’s interpretation and found substantial evidence supported the City’s determination that the property had no reasonable beneficial use without the project. In reaching its decision, the court examined whether substantial evidence supported the City’s determination that the property’s uses in its unmodified state were unreasonable under the circumstances. The court did not ask whether a project opponent could present evidence that the property could be put to some beneficial use without the project – that, the court explained, “would set a nearly insurmountable bar.” (Id. at p. 22.)

Plaintiff alternatively argued the City presented no substantial evidence to support the finding under section 126.0504, subdivision (i)(3) that denial of the Project would make it infeasible to derive a reasonable economic return from the property. The court rejected this argument because plaintiff failed to properly preserve the issue during administrative proceedings.

Plaintiff next challenged the City’s actions under section 126.0504, subdivision (a), which requires a finding that the project would not adversely affect the City’s applicable land use plans. After reviewing the record de novo, the court found substantial evidence to support the City’s conclusion that, in spite of some inconsistencies created by impacts to the original bridge, the Project as a whole furthers the majority of the goals and policies in all of the applicable land use plans.

On cross-appeal, plaintiff alleged that by proposing to construct a pay-parking structure, the City had violated the California Statutes of 1870, which set aside certain lands to remain a “free and public park.” The court disagreed; explaining that the 1870 limitations placed on the City’s powers with regard to managing city parks was annulled when the state Legislature approved the City’s charter.

Key Point:

Courts will provide deferential treatment to a City’s interpretation of its own ordinances. In addition, the limits placed on public lands by the California 1870 Statutes are annulled when a later act of the state Legislature grants the City powers to regulate and control its own public lands.

Court Defers to the City of Newport Beach’s Interpretation of its General Plan

Friday, May 22nd, 2015

In Banning Ranch Conservancy v. City of Newport Beach 2015 Cal. App. LEXIS 436, the Fourth District Court of Appeal upheld an approval by the City of Newport Beach (City) of a development project on 400 acres of undeveloped coastal property with active oilfield operations (Project). The Project consisted of developing one-fourth of the area for residential and commercial purposes, while preserving the remaining land for open space and parks, as well as removing and remediating the oil production facilities.

Petitioners fought the City’s approval, arguing the City violated its own general plan by not coordinating with the Coastal Commission before approving the Project, and the California Environmental Quality Act (CEQA) by failing to designate “environmentally sensitive habitat areas” (ESHAs).

The trial court agreed in part, finding the City failed to comply with its General Plan, but disagreed in part, holding the City had complied with CEQA. Both parties appealed.

The case in the Court of Appeal turned on two main issues: (1) what actions was the City required to engage in with the Coastal Commission prior to Project approval, and (2) must the City designate ESHAs in its EIR?

The first question presented an issue of general plan consistency.  Petitioners interpreted the City’s General Plan Land Use Policy 6.5.6 (“Coordination with State and Federal Agencies”) as requiring the City to work with the Coastal Commission on identifying wetlands and other habitats to restore and preserve before Project approval.  Conversely, the City read the same policy as loosely requiring the City to “work with” the Coastal Commission but not designating when or exactly how it must do so. The court deferred to the City’s interpretation, finding the policy was too vague on its face to impose such a mandatory requirement as the Petitioners allege.  Additionally, the City presented evidence of its interactions with federal and state agencies, including the Coastal Commission.  The Court characterized this evidence as compliance with the land use policy in question

Addressing the second issue, the court held the City’s EIR was adequate under CEQA. Petitioners believed the City avoided identifying ESHAs because that would have required a reworking of the Project. However, the City explained that it did not identify ESHAs because that is legal determination that must be left to the Coastal Commission. The EIR noted that the Project was not included in the City’s coastal land use plan, but was rather in a “Deferred Certification Area” over which the Coastal Commission still retained permit jurisdiction. The EIR also explained that the Project cannot move forward without a coastal development permit from the Coastal Commission. The court thus upheld the City’s EIR, finding the EIR contained the necessary information, and stating that CEQA does not require the City to speculate as to the likelihood of the presence of ESHAs or coastal development permit approvals; those are decisions better left to the Coastal Commission.

KEY POINT:

The court will defer to an agency’s determination of consistency with its own general plan, especially if a policy is vague enough to allow for more than one reasonable interpretation. Additionally, when a project is excluded from the coastal land use plan, as is the case with Banning Ranch, an agency can properly defer identification of ESHAs to the Coastal Commission.

CARB’s Authority to Order Recall and Repair of Heavy-Duty Vehicle Engines Upheld

Monday, January 5th, 2015

In Engine Manufacturers Association v. State Air Resources Board, 2014 Cal. App. LEXIS 1075, the California Third District Court of Appeal reversed the trial court’s judgment on the pleadings and upheld the California Air Resources Board’s (CARB) authority to adopt regulations requiring the testing and recall of in-use heavy-duty engines to protect air quality.

California Health and Safety Code section 39003 tasks CARB with “coordinating efforts to attain and maintain ambient air quality standards . . . and to systematically attack the serious problem caused by motor vehicles[.]” As part of its effort to improve air quality, CARB requires most vehicle engines certified for sale in California to include an onboard diagnostic system (OBD) that monitors and detects emissions malfunctions. CARB mandates rigorous testing that ensures new engines include a functioning OBD system, as well as compliance by a sample of in-use heavy-duty vehicle engines model year 2010 and later. If the tests show the OBD system does not function properly in the in-use engines, CARB may order the recall and repair of the engine class.

The Engine Manufacturers Association challenged the part of the regulations related to in-use engines. The Association sought a judicial declaration that the regulations exceeded CARB’s statutory authority.  On appeal, the court rejected the Association’s argument and held that, because CARB raised a defense in its answer, the trial court erred in granting summary judgment on the pleadings.

The court explained Health and Safety Code section 39003, in conjunction with other statutes, provides broad authority for CARB to regulate air quality in California. More specifically, Health and Safety Code section 43013 grants CARB the authority to “adopt and implement motor vehicle emission standards, in-use performance standards, and motor vehicle fuel specifications[.]” The court found the challenged regulations furthered CARB’s purpose by facilitating prompt repair of emission-related engine malfunctions and providing an incentive to manufacturers to make improvements in emission system durability.

The court further held the absence of specific statutory provisions regarding compliance testing of in-use heavy-duty engines did not mean the challenged regulations were invalid. Instead, it indicated only that the Legislature did not itself desire to determine the proper method of regulating such testing. The court went on to explain that under section 43013, CARB’s regulations must be “necessary, cost effective, and technologically feasible.” Accordingly, if the regulations were “unduly onerous and costly,” as the Association alleged, the regulations could exceed CARB’s authority. But because this question could not be answered on the pleadings, the trial court erred by granting judgment on the pleadings.

The court next held the trial court erred in finding the regulations were not “reasonably necessary” for CARB to carry out its intended purposes. The Association had the burden of establishing the regulations were not reasonably necessary, but did not even address the issue in its pleadings. Accordingly, the Association failed to meet its burden and judgment on the pleadings was improper.

KEY POINT

The court emphasized CARB’s broad authority to develop and enforce regulations to improve air quality in the state. Although no statute specifically allows CARB to order the recall and repair of engines for compliance with air quality monitoring systems, the Legislature’s broad directive to “attain and maintain ambient air quality standards” and “systematically attack the serious problem caused by motor vehicles” empowers CARB to enact such measures.

DC Circuit Applies FOIA Exemption to High-Speed Rail Communications

Tuesday, February 18th, 2014

The United States District Court for the District of Columbia has protected discussions between California’s High Speed Rail Authority (CHSRA) and the Federal Rail Authority (FRA) from a Freedom of Information Act (FOIA) request filed by Judicial Watch. Judicial Watch v. U.S. Dept. of Trans. (D.D.C. 2013) 950 F. Supp.2d 213. The protected discussions concerned the development of environmental impact reports for different proposed California High Speed Rail (CHSR) routes and ensuring CHSR properly complied with state and federal environmental laws including CEQA and NEPA.  CHSRA and FRA are “co-lead” agencies on the CHSR project jointly developing the required environmental impact reports. FRA is responsible for ensuring the project complies with NEPA and CHSRA is responsible for compliance with CEQA.

The court granted summary judgment for the Department of the Interior finding that certain records reflecting discussions between CHSRA and FRA were properly withheld from disclosure under FOIA’s Exemption 5. Exemption 5 protects from disclosure “inter-agency and intra-agency” documents relating to the “deliberative process” by which the government makes policy decisions. Dept. of Interior v. Klamath Water Users (2001) 532 U.S. 1, 8. The exemption exists to allow government officials to speak candidly in formulating policy, to prevent the untimely disclosure of proposals before adoption, and to avoid the confusion that would result from disclosing interim rationales that did not form a basis for the agency’s eventual action.

While a strict reading of “intra-agency” would only include employees within the same agency, the D.C. Circuit had expanded the term to include communications with outside consultants, Senators, and former Presidents, so long as the communication aided the agency’s decision-making process. The U.S. Supreme Court in Klamath, supra, set a limit on this expansive view.  Specifically, Klamath  stated that “intra-agency” could not include communications between an agency and non-agency parties with an outside interest in a government benefit adverse to its competitors, even if those communications relate to the agency’s decision-making process.

Here, Judicial Watch contended that CHSRA had an outside interest independent of FRA in seeking large amounts of limited federal funds to support the CHSR and complying with state law requirements that did not overlap with NEPA.

The court rejected these arguments for several reasons. First, even though some interests of CHSRA were distinct from FRA, those interests were too remote from the actual communications at issue in the case. Specifically, the communications did not advocate for funding for California, rather they related to helping FRA satisfy its obligations under NEPA. Second, the benefits that CHSRA sought were not at the expense of other parties. There was not a finite amount of funds available with California vying for a benefit at the expense of other states. Finally, the court noted that the relationship between CHSRA and FRA was created by statute. As a result, the communication between the agency and non-agency deserved greater support.

Because Judicial Watch could not show that CHSRA sought a benefit outside of complying with environmental laws, the court granted summary judgment for the government agencies and protected the discussions between CHSRA and FRA.

KEY POINT

This decision affirms that the D.C. Circuit will continue to apply a broad interpretation of the “intra-agency” component of FOIA Exemption 5 even after the Supreme Court’s decision in Klamath, so long as the communications do not relate to an outside party’s interest in obtaining a government benefit at the expense of others

Court Holds CEQA-Related Calendaring Error by Attorney was “Excusable Neglect” Under Code of Civil Procedure § 473

Tuesday, October 1st, 2013

In Comunidad en Accion v. Los Angeles City Council, 2013 Cal. App. LEXIS 756, the California Court of Appeal for the Second Appellate District affirmed the trial court’s dismissal of plaintiff’s unlawful discrimination claim, while reversing the dismissal of plaintiff’s CEQA claim.

The court of appeal reversed the trial court’s dismissal of plaintiff’s CEQA claim based on plaintiff’s procedural error. Plaintiff filed its petition for writ of mandate on June 10, 2010. The parties thereafter stipulated to an extension of time for preparation and certification of the administrative record, and the court’s order set October 18, 2010 as the deadline. On September 14, 2010, real party in interest moved to dismiss the suit because plaintiff had failed to request a hearing within 90 days of filing its CEQA claim, as required under subdivision (a) of section 21167.4 of the Public Resources Code. Plaintiff’s counsel requested a hearing the next day and sought relief under section 473 of the Code of Civil Procedure, which grants courts the discretion to “relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” The trial court denied plaintiff’s request for relief, finding counsel’s failure to calendar the date was not excusable neglect.

The court of appeal reversed, finding the trial court had abused its discretion in failing to grant plaintiff’s request under § 473. The court began its analysis by describing the two competing public policies at play: a preference for trials on the merits and the expeditious resolution of CEQA cases. The court then reviewed case law to show how the phrase “excusable neglect” had been interpreted by the courts. The court’s conclusion was that simple calendaring errors, without more, have been found to be excusable neglect. The cases where courts found the neglect inexcusable generally involved additional defects, such as counsel’s general disorganization, series of calendaring errors, or errors of judgment. The court was also careful to distinguish a failure to comply with a statute of limitations, where relief under § 473 may not be available.

This decision contrasts the decision in Nacimiento Regional Water Management Advisory Com. v. Monterey County Water Resources Agency (2004) 122 Cal.App.4th 961, in which the plaintiff failed to request a hearing within the time required by § 21167.4(a). In Nacimiento the plaintiff’s attorney conceded the error was based on an inexcusable mistake. This decision demonstrates that where failure to comply with § 21167.4(a) is based on excusable neglect, relief may be required pursuant to § 473 if the mistake constitutes a one-time calendaring error, and the plaintiff otherwise diligently prosecutes the case.

Plaintiff also maintained the City violated section 11135 of the Government Code, which provides that “[n]o person…shall, on the basis of race, national origin, ethnic group identification…be unlawfully subjected to discrimination under…any program or activity” administered by or that receives funding from the State.

Plaintiff argued that the City’s decision to site new and expanded solid waste facilities in a predominantly Latino neighborhood constituted a discriminatory practice. Plaintiff further maintained that the City’s local enforcement agency (“LEA”) received State funds to support its solid waste management oversight role. But the court explained that the LEA is a separate legal entity from the City and was not involved in the siting decision for this facility. The court concluded the phrase “program or activity” could not be read so broadly as to encompass any City action in relation to solid waste management—particularly where the recipient of State funds has a distinct legal identity apart from the City. Since the City had not received State funds in relation to the facility siting activity, the City’s alleged discriminatory practice fell outside the scope of the statute, and the trial court property dismissed the claim.

KEY POINTS:
Plaintiff’s counsel in CEQA litigation should request a hearing within 90 days as required by § 21167.4(a). However, failure to do so may be defensible where the error is based on a calendaring mistake.

Court Finds the Mutual Desire to Comply with CEQA does not Create a Common Interest Between Lead Agencies and Developers

Tuesday, July 16th, 2013

In Citizens for Ceres v. Superior Court of Stanislaus County, petitioners sought writ relief from the trial court’s order excluding hundreds of documents from the administrative record based upon the attorney-client privilege and attorney work-product doctrine asserted by the city and the project applicants/developers. The Court of Appeal, Fifth District, ordered the trial court to vacate its order sustaining the city’s and applicant’s privilege claims and overruled all privilege claims for communications disclosed between the city and applicant prior to the city’s certification of the EIR for the proposed project.

Prior to project approval, the city and the project applicant agreed the applicant’s proposed project would be controversial and, due to the high risk of litigation, all communications between legal counsel for the city and for the applicant were to be privileged and “protected from disclosure by the attorney-client privilege, the attorney work-product doctrine, the legislative privilege, the joint defense privilege and, potentially, other privileges and protections.” As predicted, a lawsuit was filed challenging the city’s approval of the project and certification of the EIR. When preparing the administrative record for litigation, the city did not include any of the “privileged” correspondence between the city and the applicant. The City also omitted administrative draft documents and documents not otherwise released to the public. Petitioner objected on several grounds, asserting the city improperly excluded hundreds of documents form the record. The trial court upheld the various privileges and found in favor of the city.

On appeal, the Court addressed two issues in the published portion of its decision. First, whether CEQA’s provisions defining the administrative record (specifically, Public Resources Code section 21167.6(e)) abrogate the attorney-client privilege and the attorney work-product doctrine in their entirety. And second, whether the common interest doctrine protects communications disclosed between the city and applicant prior to approval of the project.

While the Court found the first question to be “difficult” due to a lack of controlling authority, it concluded section 21167.6 does not abolish the attorney client privilege or work product doctrine. However, in a holding that could potentially jeopardize the common practice of agency-applicant joint defense agreements, the Court found the common-interest doctrine does not protect agency-applicant disclosures made before project approval. Because the interests of a lead agency and a project applicant are “fundamentally divergent” while the project application is pending, the Court held the common-interest interest doctrine cannot operate to prevent waiver of privileges when the agency and applicant disclose communications to each other during the application’s pendency and prior to project approval.

The Court noted that California does not provide an independent statutory joint defense or common interest privilege, and the common-interest doctrine only preserves privileges when parties with common interests disclose privileged communications to each other. In applying the doctrine, the Court found that while a lead agency and a project applicant/developer may have a common interest in preparing a legally defensible environmental document, a developer would have no interest in the development of an environmental document that does not support the developer’s proposal. Thus, the only “common interest” that could exist would be the creation of a legally defensible environmental document that supports the applicant’s proposal. Such an “interest” would be contrary to CEQA.

The law presumes that, before project approval, a lead agency has a neutral and objective interest in compliance with CEQA. In its neutral role, the agency could reject a proposed project or select a project alternative that the applicant opposes. The Court cited the Supreme Court’s decision in Sava Tara v. City of West Hollywood and stated “CEQA forbids an agency to be committed to accepting an applicant’s proposal before environmental review has been completed.” In light of the agency’s duty to remain neutral, it cannot have an interest, prior to project approval, in producing a legally defensible environmental document that supports the applicant’s proposal. “Before completion of environmental review, the agency cannot have as a legitimate goal the secret preparation, in collaboration with the applicant, of a legal defense of a project to which it must still be uncommitted.” And thus, the lead agency’s interest is “fundamentally at odds” with the applicant’s interest.

The Court was not persuaded by the city’s and developer’s reliance on California Oak Foundation v. County of Tehama, which held that disclosing advice to a co-defendant in the subsequent joint endeavor to defend the EIR in litigation can reasonably be said to constitute a common interest. While the city and developer interpreted California Oak to protect agency-applicant communications both before and after project approval, the Court found the case “arguably means the disclosure by the agency to the applicant took place after the project was approved” and, in such instance, the application of the doctrine is proper because after project approval there is “no conflict between the agency’s role as an ally of the developer and its role as an objective evaluator of the project.” To the extent California Oak is interpreted as set forth by the city and developer, the court disagreed with that decision.

Having found the common interest doctrine did not apply, the Court concluded “the city and developer have waived the attorney-client privilege and the protection of the attorney-client work-product doctrine for all communications they disclosed to each other before the city approved the project [and] any such communications that fall within section 21167.6, subdivision (e) must be included in the administrative record.”

In the unpublished portion of the decision, the Court addressed the remaining related issues but notably declined to provide an opinion regarding whether Section 21167.6, subdivision (e)(10) allows a lead agency to exclude from the record only administrative drafts of environmental documents (as argued by petitioners) or to also exclude administrative drafts of all preliminary documents that were not either submitted to the lead agency or circulated for public review.

Key Point: Pre-approval communications between a lead agency and a project applicant are not protected by the common-interest doctrine, thus the attorney-client privilege and work-product doctrine are considered waived and such communications may be included in the administrative record.