In King and Gardiner Farms, LLC v. County of Kern (2020) 45 Cal.App.5th 814, the Fifth District Court of Appeal found that a Kern County’s approval of a zoning amendment and streamlined process for developing new oil and gas facilities violated CEQA insofar as water supply, air quality, agricultural land conversion, noise, and recirculation principles were concerned. The Court penned a detailed 150-page opinion addressing multiple topics and relevant standards of review.
In 2013, three oil and gas industry associations approached Kern County staff with a proposal to amend the zoning ordinance to allow for a local permitting process for oil and gas exploration, development, and production activities. The proposed process would implement standardized regulations, streamline environmental review for oil and gas operations, and develop programmatic mitigation measures. If the County determined that the permit review process was ministerial, future permit applications would not be subject to additional CEQA review. Instead, the amendments would require all new oil and gas activities to undergo “Oil and Gas Conformity Review”, subject to mitigation required by the zoning amendment EIR.
In November 2015, over public comment in opposition, the Kern County Board of Supervisors approved the ordinance and certified the EIR. On December 9, 2015, King and Gardiner Farms, LLC and others (collectively, Plaintiffs) filed a verified petition for writ of mandate and complaint for declaratory and injunctive relief against the County and the oil and gas industry associations. The trial court found that the EIR violated CEQA because it failed to analyze the ordinances’ impacts to rangeland and the environmental impacts from a road paving mitigation measure that was intended to reduce air quality impacts. The trial court rejected the remaining CEQA claims.
In June 2018, Plaintiffs appealed the trial court’s rejection of the other CEQA causes of action, alleging that the court did not accurately assess the EIR’s water, air quality, agricultural land conversion, biological, and noise impacts.
The published portions of the Opinion address CEQA violations relating to water, conversion of agricultural land, and noise as well as the appropriate appellate remedy. In response to Plaintiffs’ assertion that inadequacies in the EIR undermined its effectiveness as an informational document, the Court focused on the Supreme Court’s decision in Sierra Club v. County of Fresno (2018) 6 Cal.5th 502 (Friant Ranch), which held that in some cases, claims of EIR inadequacy cannot be neatly categorized as either factual or procedural error. In such cases, the choice of the applicable standard of review for claims of inadequacy must be determined on an issue-by-issue basis. Accordingly, the Court addressed the standard of review with regard to many issues addressed in the appeal.
The Opinion’s water section addresses the EIR’s geographic scope in analyzing water supply impacts, analysis of recent drought conditions in the County, and the adequacy of mitigation measures.
- Water Supply Impacts
The Court first addressed the EIR’s regional assessment of water supply impacts. The County alleged that the substantial evidence standard of review applied to the decision to use regional subareas (as opposed to local water supplies), while Plaintiffs argued that the omission of essential information about impacts to local water supplies was subject to de novo review. The Court found that an inquiry into the EIR’s analysis to the extent “reasonably possible” was a mixed question of fact and law, in which factual questions predominated, so the substantial evidence standard applied. The Court distinguished their earlier decision in Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48 (Madera Oversight). The Court explained that while Madera Oversight stated that whether disclosures regarding a project’s water supply comply with CEQA is a matter of law, Madera Oversight’s conclusion was based on the circumstances of that case and did not constitute “an all-encompassing rule of law.”
The EIR contemplated the water demand created by the project in the context of the overall demand for water in the area. Plaintiffs contended that this approach resulted in a dearth of detailed, informative analysis required under CEQA because regional analyses disregard local water supply impacts. Plaintiffs alleged it was “reasonably possible” for the County to analyze local impacts, and that the failure to do so constituted a material error under Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal. 4th 412, 431. The County argued that localized analysis would pose technical challenges and be speculative due to uncertainties in long-term use forecasting, partly due to uncertainty surrounding implementation of the Sustainable Groundwater Management Act (SGMA).
Several real parties in interest (Oil Associations) in part argued that to the extent there were any impacts on the water supply, it was a small net positive impact because the industry’s produced water use would exceed its municipal and industrial (M&I) demand in 2035. (Produced water is poor-quality groundwater brought to the surface during oil and gas extractions; M&I water is good quality freshwater.) The Court explained this argument was erroneous because baseline water supply conditions in the project area were projected to change for the worse. However, the Court sided with Oil Associations and found that their water supply analysis was conducted to the degree “reasonably possible” because SGMA and the implementation of groundwater sustainability plans supported the determination that a localized water supply analysis would be speculative.
- Analysis of the Drought
Next, the Court addressed Plaintiffs’ argument that the EIR violated CEQA because it failed to meaningfully address a historic four-year drought, and that the failure to use the most recent water supply data underestimated the project’s actual effect on water shortages. The Court explained that under Friant Ranch, Plaintiffs’ claim raised the issue of whether the EIR’s discussion of environmental impacts was adequate, i.e., facilitates informed agency decision making and public participation. The Court assumed to Plaintiffs’ benefit that, in this context, this presented a question of law. Despite applying the more rigorous de novo review, the Court found that the EIR, including the water supply analysis, adequately facilitated informed agency decisionmaking and informed public opinion.
Plaintiffs also argued that pursuant to Guideline section 15064(b), the County was required to use updated state projections of imported water, published before the Final EIR was released in 2015. Citing Guidelines section 15125, the Court explained the EIR must describe the physical environmental conditions at the time the project’s notice of preparation is published. The Court found that the EIR did not violate CEQA because it used the information available when the notice of preparation was published in 2013 and therefore included sufficient discussion of the drought and its consequences, albeit, at its nascent stages.
The Court addressed whether updated data about the drought and its continued impact on water supplies constituted significant new information warranting recirculation. The Court reviewed the County’s determination that the updated drought data did not constitute significant new information requiring recirculation under the substantial evidence standard, in accordance with CEQA Guidelines section 15088.5. The Court found that Plaintiffs failed to acknowledge that the substantial evidence test applied to recirculation and, as a result, failed to carry their burden to establish that the decision to rely on the 2013 evidence was unsupported by substantial evidence. The Court also noted that the public nonetheless had a meaningful opportunity to comment on the Ordinance’s potential water supply impacts.
- Mitigation of Water Supply Impact
Plaintiffs alleged that the County unlawfully deferred water supply mitigation by adopting measures related to the use of M&I groundwater which lacked specific, mandatory performance criteria and would not be implemented before project activities began causing environmental impacts. The Court found that the measures inappropriately deferred formulation and delayed implementation. Relying on Endangered Habitats League, Inc. v. County of Orange (2005) 132 Cal.App.4th 77 and POET, LLC. V. State Air Resources Bd. (2013) 218 Cal.App.4th 68 (POET I),the Court stated that when mitigation is feasible but impractical at the time of a zoning amendment, the agency may defer mitigation upon committing itself to specific performance criteria. The Court found that the measures’ various directives and goals to “increase” the use of produced water and “reduce” M&I water did not constitute specific performance criteria necessary to evaluate the efficacy of the measures implemented. By stating a generalized goal for mitigation, the measures did not provide concrete understandable standards or enforceable commitments. The Court noted that if such measures satisfied CEQA, lead agencies and project proponents would have little incentive to define mitigation measures in specific terms. Instead, they would simply require permit applicants to adopt all feasible mitigation measures for a list of significant environmental impacts—undermining CEQA’s dual purposes of systematically identifying feasible mitigation measures which avoid or substantially lessen significant effects and providing a detailed statement of the measures proposed to minimize these significant effects.
After ruling the mitigation measures were inadequate, the Court devoted considerable discussion to the consequences of the defect on the overall validity of the EIR. Citing Communities for a Better Environment v. City of Richmond (2010) 184 Cal.App.4th 70, the Court noted that if the County had relied on the measures to find the project’s significant effects on water supply were mitigated to a less than significant impact, under the prejudicial abuse of discretion standard, the error would have been reversible. However, it found further analysis was required to evaluate Oil Associations’ claim that adopting a statement of overriding considerations had cured any unlawful deferral of mitigation. Specifically, Oil Associations noted the County concluded the effectiveness of the mitigations measures was uncertain, found the water supply impacts to be significant and unavoidable, and accordingly adopted a statement of overriding considerations. It argued CEQA required nothing further when all feasible mitigation had been adopted.
The Court first analyzed whether CEQA allows a lead agency to adopt mitigation measures of uncertain effectiveness; it ruled this was permissible upon the satisfaction of four criteria. First, the lead agency must find that the measures are at least “partially effective” at reducing significant environmental effects, all feasible mitigation measures have been adopted, and the environmental impacts will not be mitigated to a less than significant level. Second, the lead agency must adopt a statement of overriding considerations. Third, the EIR must identify and explain the uncertainty in the effectiveness of the mitigation measures. Fourth, the EIR must adequately describe the feasible mitigation measures.
The Court held that when considering the description of a mitigation measure, generally, independent review is appropriate. However, when factual questions predominate, review under the more deferential substantial evidence standard is appropriate. While the Court did not expressly state which standard of review applied, it appeared to treat the issue as subject to de novo review upon finding an informational deficiency. The Court found that the EIR’s discussion of the mitigation measures partial effectiveness was impermissibly ambiguous and the EIR failed to adequately describe the currently feasible mitigation measures for significant water supply impacts. The EIR provided no information about what mitigation measures applicants must implement, what technologies or techniques would achieve a balance of water supply and demand, or if an applicant would be required to commit to any measures. The Court held that it was impermissibly unclear if any mitigation would be imposed during the permitting process, and that the EIR’s disclosures were inadequate on an informational basis. Together, these failures constituted a prejudicial abuse of discretion.
The Court then concluded that the County’s statement of overriding considerations did not remedy this inadequacy because the County assumed that the EIR was adequate as an informational document in adopting the statement of overriding considerations.
The EIR concluded that the project would have a significant effect on agriculture due to continual project-related agricultural land conversions through the year 2040. Plaintiffs challenged the implementation of a four-option mitigation scheme which the EIR concluded would provide a mitigation ratio of 1:1. The options included: (1) funding or purchasing agricultural conservation easements, (2) purchasing mitigation banking credits, (3) agricultural land restoration through removing gas and oil paraphernalia, and (4) participating in “any” equally effective agricultural land mitigation program adopted by the County. The EIR stated that these options could be applied to lands within and outside of the County, and that they were sufficient to mitigate the significant impacts to agricultural lands.
Plaintiffs alleged this approach violated CEQA because it failed to ensure effective mitigation. Plaintiffs also argued that the County failed to adopt measures raised during the public comment period which would ensure effective mitigation—such as a clustering measure which would reduce the total amount of converted agricultural land. The County argued these challenges were subject to the substantial evidence standard of review and that substantial evidence supported the effectiveness of the measure.
The Court found that the agricultural conservation easement, mitigation banking credit, and “other measure” options were ineffective and that the County’s approval of the measure was erroneous under CEQA.
First, the Court determined the agricultural conservation easement option was ineffective by analogizing it to a substantially similar measure rejected in Citizens for Government v. City of Lodi (2012) 205 Cal.App.4th 296 (Citizens-Lodi), in which the Third District held that the use of agricultural conservation easements and the operation of 1:1 mitigation ratio were subject to the substantial evidence standard of review. In Citizens-Lodi, the Third District held that the city properly concluded agricultural easements of any ratio do not constitute “mitigation in the true sense of the word” because they do not reduce impacts to farmland. Accordingly, Citizens-Lodi held that the city properly rejected a 2:1 conservation easement ratio as not “feasible” and properly adopted a statement of overriding considerations. Here, the Court found that allowing applicants to enter into binding agricultural conservation easements did not create new agricultural land—it simply prevented the future conversion of that agricultural land. Because the agricultural conservation easement option did not offset the loss of agricultural land, and because it would not mitigate the significant impact to agriculture, the Court ruled that agricultural conservation easements do not provide effective mitigation for conversion of agricultural land.
The mitigation banking credit option was found to be ineffective under the substantial evidence standard used in Gray v. County of Madera (2008) 167 Cal. App. 4th 1099. In Gray, the court held that a traffic impact fee is an appropriate form of mitigation when linked to a reasonable plan for mitigation. Here, the Court extended the principle to apply to the assessment of fees and the purchase of credits to mitigate agricultural land conversion. The Court held that because the record contained no mention of mitigation banks or programs in the County, the link between the fee and the plan was lacking. Relying upon the eventual existence of banks and programs was not enough to offset the significant impacts to agricultural lands. Similarly, the Court rejected the use of the “other measures” option, based on the County’s failure to identify any effective programs or strategies.
The agricultural land restoration option was found to be effective because it would offset the conversion of agricultural land by returning previously converted land to agricultural use.
The Court identified that if agricultural land restoration was the sole option included in the mitigation measure, it would effectively mitigate agricultural losses. But, because the County approved three options which failed to mitigate these losses, the measure was infective in its entirety because permit applicants could rely on ineffective options. Therefore, the County erred in finding agricultural conversion impacts would be reduced to less than significant.
The Court addressed Plaintiffs’ argument that the County violated CEQA by failing to respond to comments proposing a clustering measure which would potentially lower the total amount of converted agricultural land. Clustering was discussed in the EIR’s “Alternative 3”, which identified that while it would not avoid impacts to agricultural lands altogether, it would minimize some environmental impacts. The County rejected Alternative 3 based on legal and economic grounds. The Court, relying again on the substantial evidence standard of review, found that although clustering was discussed in the alternatives section, the County’s response to comments was insufficient because the clustering proposal qualified as a “major environmental issue” under CEQA Guidelines section 15088. The Court held that the County’s response was deficient because it did not separately address and consider the clustering of wells and infrastructure when feasible as a possible mitigation measure. Based on this conclusion, and the conclusion that the adopted mitigation measure did not reduce agricultural land impacts to a less than significant level, the Court held that the County’s failure to provide a reasoned analysis of the proposed mitigation measure constituted a prejudicial abuse of discretion.
The project’s noise impacts were assessed by establishing a threshold of significance, predicting the noise levels associated with oil and gas activities under the project, and comparing these predictions to the significance threshold. The EIR described the environmental setting for the project by including ambient noise measurements at 18 sites within the project area. The overall average ambient noise level was 54.7 dBA, with specific measurements ranging from 44.8 dBA to 67.8 dBA. The EIR adopted a single threshold of significance from the County’s general plan, which requires mitigation to reduce exterior noise levels generated by new projects to 65 dBA or less. The EIR used the 65 dBA threshold as the maximum noise level allowed in the project area and did not consider the magnitude of the increases caused by the project. The EIR found that a permanent increase in ambient noise levels in excess of 65 dBA would occur as a result of the project but ultimately concluded that the impact would be mitigated to a less than significant level with the implementation of setback measures.
Commenters alleged that the EIR’s approach should have addressed the magnitude of dBA increases over ambient noise levels, rather than compliance with the 65 dBA cap. Specifically, commenters argued that sites which were projected to experience a 5 dBA increase in ambient noise levels required additional analysis. The EIR also included a noise study that suggested 5 dBA as a threshold for increase in ambient noise. The County rejected these suggestions, relying on the general principle that lead agencies have the discretion to determine the appropriate thresholds of significance.
Plaintiffs alleged that the EIR did not adequately analyze noise impacts and improperly selected the threshold of significance for ambient noise increases in the project area. Plaintiffs also argued that the County erred in concluding that the mitigation measures would prevent all significant increases in ambient noise. The County argued that it was entitled to substantial deference in selecting its significance threshold, and that its conclusions were supported by substantial evidence.
The Court engaged in a lengthy case review to establish the principles that conformity with an absolute maximum noise level specified in a general plan does not prevent a fair argument from being made that the proposed project would generate environmentally significant noise impacts and that a lead agency should consider both the increase in ambient noise level as well as the absolute noise level associated with a project.
The Court first found that omitting discussion of the 5 dBA increase over ambient noise levels was not an automatic violation of CEQA because (while a common threshold of significance for noise increases) the increase is not a legal threshold of significance.
Instead, the Court focused its inquiry on whether the County violated CEQA by using a single standard related to the absolute noise level as the threshold of significance for evaluating all noise impacts. The Court analogized to two cases: Berkeley Keep Jets Over the Bay Com. v. Board of Port Cmrs. (2001) 91 Cal.App.4th 1344, which addressed the adoption of a single threshold of 65 dBA for determining noise significance; and Keep Our Mountains Quiet v. County of Santa Clara (2015) 236 Cal.App.4th 716, where the lead agency deemed any increase in noise to be insignificant so long as the absolute noise level did not exceed to standards in the county general plan and noise ordinance. In both cases, the use of a single, absolute noise level as the threshold of significance violated CEQA. The Court found that the County’s exclusive reliance on the absolute noise level of 65 dBA violated CEQA because it did not provide a complete picture of potential noise impacts. The EIR did not provide an explanation of why an increase of 20 dBA at the quietest sites would be as insignificant as an increase of 2 dBA at the loudest site. The Court stated that the County’s justification was “based primarily on a self-serving legal analysis” of its discretionary authority to set thresholds of significance. The County’s responses to comments ignored authority opposing its position and failed to explain why the holding in Keep Our Mountains Quiet (stating that conformity with a general plan will not insulate an EIR from a judicial conclusion that the project fails to comply with CEQA) did not apply. The EIR also failed to explain why the magnitude of the increase in ambient noise levels played no role in determining whether the change was significant.
The Court noted that under Center for Biological Diversity v. Department of Fish and Wildlife (2015)62 Cal.4th 204, agencies have “substantial” discretion to choose thresholds of significance, but this discretion is not unlimited or absolute. When relying on a single quantitative method to justify a no-significance finding, lead agencies are required to support their chosen quantitative method for analyzing significance with evidence and reasoned argument. Here, the County failed to document how the single absolute threshold—which did not consider the magnitude noise increases—accurately described how changes in noise would impact receptors in the project area. If the County had recognized that both the increase in ambient and absolute noise levels of noise associated with a project were relevant to environmental review, it “might” have been able to show why the magnitude was irrelevant in determining significance, but the failure to do so in the EIR constituted a violation of CEQA. The Court concluded that the County’s claim that its general plan provided substantial evidence supporting its choice of threshold was insufficient because the general plan did not conclude that all increases in magnitude were insignificant until the 65 dBA cap is exceeded.
The Court concluded that the County must set aside certification of the EIR and the ordinance authorizing the project but allowed the permits already issued under the ordinance to remain in effect.
The Court rejected the County’s request to leave the ordinance in effect while a new EIR was prepared, noting that CEQA is designed to protect the public’s interest in the environment. This is in contrast to the holding in POET I, where the Air Resources Board (ARB) violated CEQA in connection with approving statewide regulations containing low carbon fuel standards but the underlying program was kept in place. In POET I, the court held that voiding the approval of a program does not necessarily invalidate or suspend the operation of the program. Instead, in “extraordinary cases”, the court can maintain the status quo and allow the regulations to continue operating. In POET I, the Legislature required ARB to implement low carbon fuel standards by adopting regulations—an action which would protect the environment—so ARB did not have the discretionary authority to abandon the project. Here, in contrast, the County was not required to adopt the program. Additionally, it was indisputable that the program would not protect the environment.The Court concluded that the desire to protect economic benefits did not warrant the exercise of their authority to leave the program in place.
In unpublished portions of the Opinion, the Court concluded the County violated CEQA with respect to air quality and related health risks and by failing to recirculate a health risk assessment for public review.
Adopting a statement of overriding considerations does not cure the failure to analyze potentially feasible mitigation measures where the EIR only adopts mitigation of “uncertain” efficacy. The court held that agricultural conservation easements that do not offset losses to agricultural land do not constitute effective mitigation. Where an EIR exclusively relies on an absolute noise threshold, and disregards potentially significant changes in ambient noise levels, the EIR must provide substantial evidence to support its determination that the change in ambient noise is irrelevant to the significance of the noise impact. A regulatory program with significant, adverse environmental impacts that serves to attain economic benefit does not constitute an “extraordinary case” warranting a court exercise its inherent equitable authority to uphold the status quo and allow the regulations to remain operative while the lead agency complies with CEQA.