Fourth District Finds Failure to Evaluate Consistency with CAP Rendered MND Incomplete Despite no Fair Argument of Inconsistency; Rejects Piecemealing, Project Description, and Aesthetic Impacts Claims, and Others as Barred by a Failure to Exhaust Administrative Remedies

November 16th, 2021

By: Dustin Peterson



In McCann v. City of San Diego (2021) 70 Cal.App.5th 51, the Fourth District Court of Appeal found that the Plaintiff, Margaret McCann (McCann), was barred from bringing a judicial action challenging the City’s approval of projects for undergrounding utility lines because she failed to exhaust the City of San Diego’s (City’s) administrative appeal process.  With regard to a second set of undergrounding projects also challenged by McCann, the Court ruled that the City’s mitigated negative declaration (MND) failed to adequately examine whether the projects were consistent with the City’s Climate Action Plan (CAP). However, it ruled in favor of the City on the Plaintiff’s allegation regarding aesthetic impacts, concluding that generalized claims and reliance on the comments of a single speaker did not support a fair argument and, further, case law suggests that small utility boxes do not require preparation of an environmental impact report (EIR).

Since the 1970s, the City had been engaged in an effort to convert its overhead utility system to an underground system at a rate of 15 miles of utility lines per year. During the construction phase, workers would dig trenches or tunnels to accommodate the underground lines and install transformers aboveground every 8 to 14 homes, as needed. These cube-shaped boxes were roughly three feet in each dimension and placed on what is known as the “devil’s strip” between the sidewalk and the curb.

In 2016, the City Council approved a project allocation identifying 11 blocks for undergrounding districts (Exempt Projects). Shortly thereafter, McCann became involved in the undergrounding process for her neighborhood and discussed her concerns with City staff by email. In 2018, the City determined that the 11-block undergrounding effort would be exempt from CEQA pursuant to the categorical exemption for replacement or reconstruction of existing facilities and issued a Notice of Right to Appeal (Notice) identifying the blocks and detailing the work to be done. The Notice was posted on the City’s website and was sent via email to city councilmembers and local community planning groups. It stated that the environmental determination was appealable to the City Council and that applications to appeal the CEQA determination must be filed with the City Clerk within 10 days from the posting of the Notice. No one filed an administrative appeal. Months later, the City held a public hearing on the Exempt Projects. McCann voiced her opposition at the hearing, but the City approved the Projects, issuing two notices of exemption.

The City also published a draft MND for nine additional potential undergrounding projects (MND Projects) and found that there would be no significant impacts due to aesthetic effects or greenhouse gas emissions (GHG emissions). The City Council unanimously approved the undergrounding project over McCann’s written and public comments in opposition.

McCann filed a timely writ of mandate alleging the City violated CEQA with respect to both the Exempt Projects and MND Projects and filed a temporary restraining order to stop the City from engaging in any project-related construction. The trial court denied McCann’s petition, and this appeal followed.

Exhaustion of Administrative Remedies

The trial court found that McCann failed to exhaust administrative remedies with regard to the Exempt Projects. The Court of Appeal agreed. The CEQA Guidelines allow a lead agency to establish procedures governing appeals and several cases recognize that when an agency elects to adopt an administrative appeal process, parties who fail to exhaust the administrative appeals process are barred from bringing a judicial action challenging the environmental determination. Here, the City provided the Notice that its CEQA exemption determination could be administratively appealed within 10 days in accordance with the City’s Municipal Code. McCann conceded that she did not appeal, but argued that the Notice (1) violated due process; (2) failed to comply with CEQA; and (3) improperly bifurcated the environmental determination process.

McCann argued that she was entitled to the constitutional right of notice and a hearing because the City’s decision amounted to a land use decision substantially affecting her property rights. The Court found no merit in this argument. It held that an environmental determination under CEQA is not itself a land use decision affecting property rights (such as a project approval). Further, the Court held that CEQA does not require a particular form of notice or method of procedure, so long as there is a reasonable notice and a reasonable opportunity to be heard. As such, the Court found that the City’s Notice was consistent with CEQA and did not violate due process.

Alternatively, McCann argued that she should be excused from exhausting administrative remedies because the City’s noticing process was inadequate under CEQA. The Court noted that McCann failed to cite any provision of CEQA or the Guidelines in support of this position, and that McCann mistakenly relied on case law that dealt with distinct requirements for a notice of exemption rather than with a notice of right to appeal. The Court pointed out the difference between a notice of right to appeal under the City Code, which alerts parties to the right to file an administrative appeal, and a notice of exemption, which alerts parties of the shortened time frame to file a legal action under CEQA. Because McCann failed to respond to the City’s notice of right to appeal, she failed to exhaust administrative remedies and her challenge to the Exempt Projects was barred.

Finally, McCann argued that she was not required to pursue an administrative appeal because the City allowed staff to make the exemption determination despite the projects requiring City Council approval.  The Court disagreed, noting that CEQA Guidelines section 15025(a) allows the determination of whether a project is exempt to be delegated to staff.  The Court saw no error in the City’s process and found that McCann failed to establish any excuse for her failure to exhaust administrative remedies.

Piecemealing

With regard to the MND Projects, McCann argued that the City violated CEQA by impermissibly segmenting the undergrounding projects rather than considering the projects as one citywide project. The Court disagreed with McCann’s argument. A proposed project is part of a larger project for CEQA purposes if the proposal is a crucial functional element of the larger project such that, without it, the larger project could not proceed. However, the Court here found that each of the undergrounding projects had independent utility and did not rely on other undergrounding projects. As such, the Court found the City did not err in defining the scope of the MND Projects.

Project Description

McCann asserted that the City failed to consider the environmental impacts of the MND Projects because the City approved the projects before deciding on the precise location of the transformer boxes. McCann argued that the City could not defer disclosure and design of “the most controversial aspect of the project.” However, the Court made clear that nothing in CEQA requires an agency to focus on controversy and, further, that neighborhood sentiment is not an impact that must be directly considered in the environmental determination process. The Court agreed with the City’s position that regardless of the precise location of each transformer, the environmental impacts would remain the same, and that McCann implicitly accepted this premise by arguing that the transformers would impact aesthetics regardless of their location. Accordingly, the Court found that McCann failed to establish that the precise location of the transformers was critical to considering the environmental impacts of the project.

Significant Aesthetic Impacts

With regard to the location of the transformers, McCann argued that the record contained substantial evidence to support a fair argument that the MND Projects would have a significant effect on the environment due to aesthetic impacts, and the City should have prepared an EIR. In light of existing case law, the Court disagreed and found that the aesthetic impacts of the transformers fell far short of being significant impacts triggering an EIR. McCann’s arguments focused on the impact on the aesthetics of her own neighborhood. However, only the Exempt Projects were proposed for that area, and McCann had failed to exhaust administrative remedies with regard to the Exempt Projects. However, McCann raised an additional, generalized claim regarding the aesthetics of the MND Projects in another neighborhood, which the Court considered.

McCann argued that placing transformers aboveground along streets in a manner requiring the removal of mature trees would have significant aesthetic impacts. In support, McCann relied on the testimony of a community member who expressed concerns regarding the location of the transformers and how they may attract graffiti. The Court observed that, while lay opinion from the community may provide substantial evidence to support a fair argument of a significant environmental impact, individualized claims of aesthetic impacts do not constitute substantial evidence. Here, McCann relied on the comments of a single speaker, along with her own comments. The Court found this was simply not enough to meet the burden of demonstrating that substantial evidence supported McCann’s claim. Further, the Court opined that even assuming that the limited comments did constitute substantial evidence, they failed to support a fair argument of aesthetic impacts.

McCann also argued that the transformers would change the “look and feel” of the “quaint” residential neighborhood, but failed to cite any cases deeming similarly small structures would substantially degrade the visual character of a neighborhood. The Court disagreed with McCann, noting that cases cited in support of her position generally involved large buildings or structures in rural or undeveloped areas.

Greenhouse Gas Emissions Analysis

McCann also challenged the City’s findings that the projects would have no significant impact due to GHG emissions. The Court agreed. CEQA Guidelines section 15183.5 allows agencies to adopt broad GHG emission reduction plans, which can then provide a basis for streamlining later CEQA analyses.  Using a CAP, an agency may fulfill its duty under CEQA to consider GHG emissions – provided that the CAP is sufficiently supported and adequately detailed – by analyzing whether the specific project is consistent with the broader plan.

In conjunction with its CAP, the City had prepared a Consistency Checklist (Checklist) for the express purpose of establishing impact significance through such consistency. However, the Checklist was not applicable to non-building infrastructure projects, such as roads and pipelines, and in this case transformers. The City argued that its recognition that the Checklist did not apply to these projects represented completion of the Checklist, therefore establishing CAP consistency. However, the Court found that the Checklist’s inapplicability meant that it could not provide a basis for determining if the projects would have a significant impact because the City failed to conduct the additional analysis necessary to determine consistency with the CAP. The Court found this omission to constitute an abuse of discretion. While the Court concluded that the City did not necessarily have to complete an EIR, they would have to perform the required analysis to determine whether the MND Projects were consistent with the CAP. The Court reversed and directed the trial court to enter a new judgment granting the petition on this cause of action.

Denial of Preliminary Injunction

Lastly, McCann challenged the trial court’s order denying her request for a preliminary injunction.  McCann argued that she did not seek an injunction for the entire project, but just for the trees that the City was planning to cut down on her street. The Court rejected this argument, and agreed with the trial court’s determination that McCann could establish no probability of prevailing on the merits because the trial court had denied her writ petition at the same hearing.

Key Points: 

  • A lead agency’s CEQA appeal procedures must be exhausted before a petition is filed.
  • Generalized claims and reliance on a single public comment regarding the aesthetic impact of proposed 3-foot utility boxes along a street did not represent substantial evidence supporting a fair argument of significant aesthetic impact.
  • When relying on a CAP to evaluate the significance of GHG impacts, a lead agency must establish that the project is consistent with the CAP, even absent a fair argument to the contrary.