Fourth District Court of Appeal Halts Utility Undergrounding Project on Greenhouse Gas Claim

McCann v. City of San Diego
(2021) (Case No. D077568)

On October 8, 2021, the Fourth District Court of Appeal issued its decision in McCann v. City of San Diego, Case No. D077568.

In this case, a single property owner (Petitioner) challenged the City of San Diego’s decision to approve two sets of projects that would convert overhead utility wires to an underground system, claiming the City failed to properly consider the environmental impacts of the projects under the California Environmental Quality Act (CEQA).  The trial court upheld the City’s decision.  Petitioner appealed, and the Fourth District Court of Appeal partly affirmed and partly reversed the trial court’s decision.

The City determined the first of its two utility undergrounding projects was exempt from environmental review under CEQA.  Accordingly, the City posted a notice, which stated its decision could be appealed through the City’s administrative process.  Because Petitioner failed to file an administrative appeal with the City, the Court held that Petitioner failed to exhaust administrative remedies and was barred from seeking judicial review of the City’s decision.  The Court relatedly rejected multiple claims that challenged the constitutionality and adequacy of the City’s notice of its determination and the right to appeal.

The City’s second utility undergrounding project was not exempt from environmental review (due to potential impacts to cultural resources requiring mitigation); as a result, the City adopted a mitigated negative declaration (MND) for the project.  Petitioner challenged the City’s decision to approve this project and the adequacy of the MND under CEQA, arguing the MND: (1) improperly segmented the project into smaller portions; (2) failed to define the location of the project’s above-ground transformer boxes; (3) failed to adequately consider the project’s aesthetic impacts; and (4) failed to adequately consider the project’s impacts to greenhouse gas emissions.  The Court rejected the first three arguments but agreed with petitioner’s greenhouse gas claim.

First, the Court held the project was not improperly segmented or piecemealed.  The Court determined the project did not rely on any other undergrounding project, so the project was independent and properly reviewed as such by the City.

As to Petitioner’s second claim, the Court determined the MND’s analysis was not deficient by way of its omission of the exact location of the transformer boxes.  Both parties had agreed the potential impacts of the project would be the same regardless of where exactly the boxes were located.  Therefore, the failure to determine the precise location of the boxes did not preclude adequate consideration of the project’s potential impacts under CEQA.

Third, the Court rejected the argument that substantial evidence supports a fair argument that the project’s above-ground transformer boxes and removal of trees would have a significant aesthetic impact.  Petitioner’s argument was based solely on testimony from a single commentor at the City Council hearing.  Even though the Court recognized lay testimony can provide substantial evidence to support a fair argument in some cases, the Court noted cases frequently find “that individualized claims of aesthetic impact do not constitute substantial evidence.”  The Court also pointedly observed that it could “see no reason to believe that CEQA requires an EIR to evaluate the aesthetic impact of small, three-foot cubes placed next to the street in a developed neighborhood.”

Lastly, the Court addressed Petitioner’s greenhouse gas claims.  To determine whether the project would have a significant greenhouse gas impact, the City analyzed the project’s consistency with the City’s adopted Climate Action Plan (CAP).  The City analyzed whether the project was consistent with the CAP by utilizing the analytical framework set forth in the CAP’s Checklist.  Notably, the Court agreed this was a generally acceptable approach to analyze a project’s potential greenhouse gas impacts.  However, the CAP’s Checklist states it only applies to projects that require certificates of occupancy, which this project does not.  Therefore, the Court determined the City should not have relied on the Checklist to perform its consistency analysis.  The Court concluded: “Thus, the City’s MND determination is incomplete because it failed to analyze whether the projects were consistent with the [CAP] and additional analysis is necessary before the City can properly certify the MND.”  The Court suggested that the City create a “second checklist that applies only to infrastructure projects” in order to close the analytical gap in the existing Checklist and create implementable pathways for CEQA streamlining for infrastructure projects consistent with the CAP.  The Court also clarified it was not necessarily ordering the City to prepare an EIR because the Court determined there was no evidence in the record supporting an argument the project would be inconsistent with the CAP.

Overall, this decision covers a range of procedural and substantive CEQA-related issues and presents a reminder to be mindful of the details in impact analysis that tiers from a greenhouse gas reduction strategy meeting the requirements of CEQA Guidelines section 15183.5.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert.  Legal counsel should be sought for answers to specific legal questions.]