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Second Appellate District Calls Settlement Agreement Part of “Project” for CEQA Consideration In Line with Historically Broad “Project” Definition

Land erosion is visible under steps to Malibu’s Broad Beach. (Melanie Wynne)

In County of Ventura v. City of Moorpark (2018) 24 Cal. App. 5th 377, the Second Appellate District upheld a CEQA exemption applied to a project undertaken by the state-created Broad Beach Geologic Hazard Abatement District (BBGHAD). Notably, the Court held that the “project” for CEQA consideration, as approved by the California Coastal Commission and State Lands Commission, included both plans to restore the beach and a settlement agreement detailing project truck’s traffic restrictions. The Court held that the settlement agreement restrictions were not preempted by state law, and do not constitute an attempted extraterritorial regulation. However, the abdication of BBGHAD’s police power in portions of the agreement was improper therefore voiding that part of the agreement.

The state created BBGHAD to address beach and sand dune erosion at Malibu’s Broad Beach. Here, BBGHAD was to restore and restock sand at the beach. The project would involve shipments of 300,000 cubic yards of sand, four subsequent deposits of equal size at five year intervals, and additional shipments of 75,000 cubic yards on an as-needed basis. The sand was to be collected from quarries 30-40 miles away from Broad Beach and transported by trucks to the beach. The initial deposit alone was estimated to require 44,000 one-way truck trips. Possible truck routes from the quarries to the beach either required traveling through the City of Moorpark or on roads adjacent to the community. In the project’s planning stages, Moorpark officials expressed concern that hauling sand on these routes would negatively impact residents, and eventually created a settlement agreement with BBGHAD. BBGHAD agreed to specific haul routes, truck staging requirements, changes in route in response to settlement-defined road emergencies, and made concessions to only change the tenants of the agreement upon mutual assent. Thereafter, the Coastal Commission approved a coastal development permit for the beach restoration project, including the incorporated settlement agreement. The County of Ventura challenged the project in a petition for writ of mandate, alleging that the settlement’s incorporation is preempted by state law, constitutes an illegal attempt by Moorpark to regulate traffic outside of their city’s limits, and represents an abdication of BBGHAD’s state-granted police power.

The trial court found that the project was statutorily exempt from CEQA, held that the settlement agreement was not preempted by the state’s Vehicle Code, and found that the settlement was not an improper attempt by Moorpark to regulate traffic outside city limits. The trial court found that BBGHAD improperly contracted away its ability to break the settlement, struck the settlement’s mutual assent provision, and held that BBGHAD must be able to modify the agreement in response to changed circumstances.

The Second Appellate District affirmed the trial court’s ruling. On appeal, in addition to its original claims, Ventura contended that the settlement agreement is an action distinct from the Broad Beach restoration project, thus beyond the protection of the exemption and subject to CEQA review. The Court disagreed, and found that the settlement agreement between Moorpark and BBGHAD was part of the whole beach restoration effort. The Court stated that when two activities are a coordinated endeavor to obtain an objective or are otherwise related to each other, they constitute a single project for purposes of CEQA. Only when the second activity is independent of and not a contemplated future part of the first activity may the two activities may be reviewed separately.

Turning to the preemption argument, the Court found Vehicle Code section 21 was not implicated in Moorpark’s settlement agreement. Vehicle Code section 21 prohibits local authorities from enacting resolutions or ordinances which affect state traffic restrictions. The Court found that because the agreement did not involve an ordinance or resolution (rather, it was the City acting under its contracting power), it was not preempted by Vehicle Code section 21. The Court further found that the agreement merely dictated the routes BBGHAD’s contractors and subcontractors must use when delivering on behalf of the project because it did not amount to a physical barrier which would redirect traffic, did not close roads, and did not restrict non-project related hauling.

The Court then addressed the extraterritorial regulation contentions. Moorpark was within its contracting rights to further its implied necessity function of preventing public nuisances on their roads vis-a-vie the thousands of sand shipments. Additionally, the Court found the traffic restrictions on BBGHAD shipments were valid, as they only affected activity within the city limits.

Turning to the issue of infringements on BBGHAD’s police power, the Court found that as an entity of the state, BBGHAD was entitled to exercise a portion of the state’s police power. However, BBGHAD erred in part of the settlement agreement by contracting away its right to exercise its police power in the future. The agreement, in part, bound BBGHAD to surrender its discretion to haul routes in the future unless mutual assent was achieved between BBGHAD and the City. The Court found that this grant of veto power infringed upon the state’s police power therefore was invalid. In examining if this error was sufficient to render the entire agreement void, the Court weighed the agreement’s impact on the public and the expressed intentions of the parties, and determined that the aspects of the agreement which infringed on BBGHAD’s state-granted police power were severable from the rest of the agreement. Accordingly, the Court upheld the agreement in part and struck the agreement in part.

Key Point:

While incorporated settlement agreements with local authorities in project planning is allowable as part of one CEQA-defined “project”, when contracting with state entities, it is important to not infringe upon state police powers through the creation of modification clauses requiring assent from all parties.

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dateJune 14th, 2018byby

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