Twelve States and Multiple Environmental Groups Sue the U.S. Environmental Protection Agency Over Greenhouse Gas Emissions Standard for the Aviation Industry

On January 15, 2021, twelve states, led by the State of California, and the District of Columbia filed a petition for review in the United States Court of Appeals for the District of Columbia Circuit, challenging the U.S. Environmental Protection Agency’s (EPA) final greenhouse gas (GHG) emission standard for aircraft vessels and engines.[1] On the same day, environmental groups, Earthjustice, Center for Biological Diversity, Friends of the Earth, and Sierra Club, filed their own petition against the EPA.

The subject EPA rule, effective January 11, 2021, is the first of its kind – representing the nation’s first GHG emissions standard for the aviation industry.  Despite sounding rather ground-breaking, the aforementioned legal challenges to the rule arise because of arguments that the rule does, well, nothing. Specifically, the rule adopts a “fuel-efficiency-based metric” that is based on and consistent with standards set by the International Civil Aviation Organization. The EPA does not expect this standard to cause any considerable reductions in GHG emissions because most airplanes in the United States already meet the standard. In other words, GHG emissions from the aviation industry will continue in a largely business-as-usual manner.

The lawsuits by the states and environmental groups are thus challenging what appears to be an ineffectual emissions standard that is inconsistent with the EPA’s recognition in 2016 that GHG emissions from aircraft endanger public health and welfare (see 81 Fed. Reg. 157, 54422). In fact, the states intend to argue that the EPA acted arbitrarily, capriciously, and unlawfully by adopting a rule that: (1) fails to reduce emissions; (2) lags behind existing technology by a decade; and (3) excludes more effective alternatives from consideration.[2] As explained by Earthjustice: “This standard fails to reduce emissions from aircraft and represents a missed opportunity to address climate change … Our petition asks the D.C. Circuit to hold [the] EPA to this obligation to work toward a future where our transportation systems no longer contribute to a warming world.”[3]

As we monitor the progress and outcome of these petitions in the D.C. Circuit, it will be interesting to see whether the aviation emissions standard is preemptively amended anyways under the new Biden administration. In fact, this seems likely given President Biden’s executive order directing the EPA to review the rule for consistency with Biden’s firm stance on achieving environmental justice, and to amend or rescind the rule if it is inconsistent with articulated environmental goals.[4]

[1]           The final EPA rule is published at 86 Fed. Reg. 2136 (Jan. 11, 2021).

[2]           See Connecticut Office of the Attorney General, Press Release, Attorney General Tong Joins Suit to Block Trump Administration Rule that Locks in Dangerous Levels of Airplane Greenhouse Gas Emissions, Jan. 15, 2021, https://portal.ct.gov/AG/Press-Releases/2021-Press-Releases/AG-Tong-Sues-to-Block-Rule-that-Locks-In-Dangerous-Levels-of-Airplane-Greenhouse-Gas-Emissions.

[3]           See Earthjustice, Lawsuit Challenges Trump Administration’s Failure to Cut Airplane Climate Pollution, Jan. 15, 2021, https://earthjustice.org/news/press/2021/lawsuit-challenges-trump-administrations-failure-to-cut-airplane-climate-pollution.

[4]           See Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, January 20, 2021, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-public-health-and-environment-and-restoring-science-to-tackle-climate-crisis/.

[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.]

California Court Upholds Responsible Agency’s Post-EIR-Certification Order to Mitigate Environmental Impacts

Santa Clara Valley Water Dist. v. San Francisco Bay Reg’l Water Quality Control Bd.
(2020) 59 Cal.App.5th 199

In Santa Clara Valley Water Dist., the California Court of Appeal (First District) recently affirmed that the California Environmental Quality Act (CEQA; Pub. Resources Code, §§21000 et seq.) does not defeat an agency’s authority under other statutes. The Court more specifically upheld a responsible agency’s order to mitigate water quality impacts under the agency’s independent authority to administer and enforce the Porter-Cologne Act (Wat. Code, §13000 et seq.). The Court upheld the mitigation order, despite the responsible agency’s “apparent violation of CEQA” in processing these additional mitigation requirements.

Factual Background

 The case involved a flood control project for a creek in Santa Clara County that historically has flooded every 10 to 20 years. In 2014, the U.S. Army Corps of Engineers (Corps) completed environmental review under federal law for the project. The Corps’ environmental impact statement identified the Santa Clara Valley Water District (District) as the project sponsor. In January 2016, the District as the lead agency issued a final environmental impact report (EIR) under CEQA.

During the same time frame, in September 2015, the Corps applied to the Regional Water Quality Control Board, San Francisco Bay Region (Board) for a “401 certification,” the purpose of which was to certify that the project complied with the state’s water quality laws. Under the federal Clean Water Act, such a certification is generally necessary before a federal agency, such as the Corps, will approve a project that involves a discharge into navigable waters. Here, the Board determined that the Corps’ application was incomplete because it did not include a proposal for compensatory mitigation to address project impacts on waters and wetlands. In response, the state’s congressional delegation and the Governor’s office “pressured” the Board to approve the project, because it was needed to protect a BART station under construction and would lose federal funding if the Board did not promptly issue the 401 certificate. As a compromise, the Board, Corps, and District agreed that the Board would issue its 401 certificate quickly, so that the Corps could proceed with construction. However, the Board made clear to the District that, after issuing its 401 certification, it would subsequently issue waste discharge requirements (WDRs) under the Porter-Cologne Act to address project design issues and other impacts that it did not believe were sufficiently handled.

Consistent with its agreement, in March 2016, the Board issued a 401 certificate for the flood control project. The certificate specifically noted that it was being issued to facilitate the construction schedule for the project relative to the opening of the BART station, and that the Board would later consider adoption of WDRs to address “compensation” for project impacts. Subsequently, in April 2017, after holding two hearings and taking public comment, the Board issued WDRs requiring the Corps and District to provide addition mitigation for water quality impacts. The order, which was issued when construction on the project was almost complete, stated that it was rescinding and superseding the previous 401 certification.

The Court Upheld The Board’s WDRs

The District filed a petition for a writ of mandate challenging the Board’s WDR order, raising arguments under the Clean Water Act, Porter-Cologne Act, CEQA and other laws. As discussed below, the trial court denied the petition and the Court of Appeal affirmed the judgment in favor of the Board.

First, the District argued that the Board’s recission and reissuance of the 401 certificate was invalid under the Clean Water Act, because it violated the one-year time limit for action under section 401 of the Clean Water Act. (See 33 U.S.C. §1341(a)(1) [Clean Water Act certification requirements are waived if a state fails or refuses to act on a certification request within a reasonable time, which shall not exceed one year].) The Court of Appeal found this argument “may be correct.” However, the Court refrained from examining this argument because the Porter-Cologne Act (discussed immediately below) provides sufficient independent authority for the Board’s WDRs. Specifically, a Regional Board’s authority to issue a 401 certification is not intended to prevent it from issuing WDRs. (Cal. Code of Regs., tit. 23, §3857.)

Second, the District argued that the Board had no authority to issue the order under the Porter-Cologne Act because the project did not involve the discharge of “waste” into state waters. The goal of the Porter-Cologne Act “is to attain the highest water quality which is reasonable” considering the circumstances. (Wat. Code, §13000.) To that end, the Act applies to the discharge of “waste.” Here, the project involved the widening of a creek bed, which would slow the flow of water and lead to increased sedimentation concentrated in the creek, instead of carried downstream. The Court held that the sedimentation effects qualified as the discharge of “waste.” The Court relied on established precedent holding that concentrated silt or sediment associated with human habitation and harmful to the aquatic environment is “waste” under Water Code section 13050. Accordingly, the Board had jurisdiction to impose mitigation requirements under the Porter-Cologne Act.

Third, the District argued that the Board’s failure to impose the mitigation requirements as part of the Board’s CEQA review of the project barred it from imposing those requirements later via WDRs. Specifically, while the District was the CEQA “lead agency,” the Board was a CEQA “responsible agency” because it also had discretionary approval authority over the project. Under CEQA, a responsible agency must consider the lead agency’s EIR and, if it believes the EIR is inadequate for its use, must either: file suit in court; prepare a subsequent EIR if permissible; or assume the lead agency role. (CEQA Guidelines, §15096(e).) The District argued that the Board waived its mitigation concerns because it did not avail itself of one of these avenues. The Court disagreed, because the Board had independent authority—and indeed the obligation— to administer and enforce the Porter-Cologne Act. In fact, CEQA includes a “savings clause,” providing that CEQA does not deprive public agencies of their independent authority under other laws. (Pub. Resources Code, §21174.) In short, an EIR’s finality cannot prevent a responsible agency from exercising its independent authority under other laws.

Notably, the Court of Appeal discussed that the “sequence” of the Board’s actions appeared to violate CEQA. Under CEQA, an agency cannot formally approve a project, or commit itself to approve it, without first complying with CEQA. (See Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, 138.) Here, the Board issued its original 401 certification, finding that the project’s environmental impacts would be mitigated to less-than-significant levels. However, the 401 certification also stated that the Board would “later consider” WDRs to address environmental impacts. The Board’s “two-step approval process” was an apparent Save Tara violation. Lucky for this project, however, no outside party emerged to challenge this process. The Court noted “agencies cannot count on such a lack of opposition in the future.”

In short, the Santa Clara Water Dist. case illustrates issues that can arise when multiple public agencies — and multiple laws — are involved in a project’s environmental review and approvals. In general, public agencies must integrate CEQA with the procedures of other planning and environmental review laws, “to the maximum feasible extent.” (Pub. Resources Code, §21003, subd. (a); Guidelines, §15080.) However, CEQA does not prevent responsible agencies from discharging independent responsibilities under other environmental laws separate from, outside of, and after completion of the CEQA process.

[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.]

California Court of Appeal Upholds Short-Term Vacation Rentals in Coastal Zone Condominium Complex

Lastavich v. Nob Hill Homeowners Association et al. (Case No. D075466)

Short-term vacation rentals (STVRs), typically defined as residential rentals for less than 31 consecutive days, have grown increasingly popular in recent years, thanks to companies such as Airbnb and VRBO. Even in the COVID-19 era, STVRs have seen a surge in demand because travelers perceive STVRs as safer than hotels.[1]

With the growing prevalence of STVRs, some municipalities have begun prohibiting and/or regulating STVRs, including via standards set forth in city and county municipal codes and zoning ordinances. In addition, for many Californians, homeowners’ associations (HOAs) function as a secondary form of oversight, regulating many aspects of their daily lives. (Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 CalApp.4th 914, 922.) For such properties, Covenants, Conditions & Restrictions (CC&Rs) may be recorded against the property, or the HOA may have other rules and regulations, that restrict or regulate rental activities. Some HOAs and CC&Rs prohibit residential rentals of less than 30 days.

Recently, the California Court of Appeal’s Fourth District held that the governing CC&Rs of a condominium complex located in the City of Carlsbad do not prohibit STVRs. (Lastavich v. Nob Hill Homeowners Association et al. (Dec. 2, 2020, D075466 [nonpub. opn.].) The condominium complex at issue is a four-unit complex located in Carlsbad’s coastal zone. GDB represented the defendants/respondents – the HOA and two members of the HOA who have rented their units as STVRs since as early as 2005. The plaintiff also is a member of the HOA and has lived in the complex since 1998; he brought this action against the defendants/respondents in 2017, alleging breach of fiduciary duty, fraud, trespass, negligence, intentional and negligent infliction of emotional distress, and violation of the CC&Rs.

The CC&Rs, recorded in 1986, restrict each of the complex’s units to “be used as a single family residence and for no other purpose or purposes.” The plaintiff claimed that this restriction prohibits “commercial” enterprises such as STVRs, and contemplates residential use of the units by owners, guests and tenants, but not “transient vacation lodgers.” The plaintiff sought an order prohibiting STVRs at the complex, a declaration that STVRs violated the CC&Rs, and both general and punitive damages. After a bench trial, the trial court entered judgment in favor of the defendants/respondents, finding that “short term vacation rentals are not a business and that their use do[es] not violate the CC&Rs.” The trial court also awarded the defendants/respondents attorney fees.

On appeal, the Fourth District affirmed the trial court’s judgment, as well as the award of attorney fees. In its independent review of the CC&Rs, the court noted that restrictive covenants, such as CC&Rs, must be construed strictly against those seeking to enforce them and in favor of the unencumbered use of the property. Restrictions on the use of land cannot be “read into” CC&Rs by implication. Here, the court gave the CC&Rs a “just and fair interpretation” and determined that they do not expressly or implicitly prohibit the use of the condominium units as STVRs.

For purposes of this appeal only, the court defined an “STVR” to mean a rental of less than 30 days. This is the definition used by the plaintiff and by the City of Carlsbad’s Ordinance No. CS-272, which permits STVRs in the coastal zone where the subject condominium complex is located.

In reaching its ruling, the Fourth District noted that multiple sections of the CC&Rs expressly contemplate the units can be rented and/or leased by non-owners without regard to any minimum number of days or time period. The court also considered sworn testimony from the drafter of the CC&Rs, who testified she had no intent to restrict or prohibit STVRs or other rental use of the units. Moreover, the undisputed evidence showed that most of the former and current property owners, other than the plaintiff, have used their units as STVRs, dating back to 2005. Further, the plaintiff was aware of such use since 2005.

In short, and based on the undisputed evidence before it, the Fourth District concluded that the CC&Rs of the Carlsbad condominium complex do not prohibit owners from using their units as STVRs. In doing so, the unpublished opinion upholds the free use of property by not imposing restrictions in the absence of clear, express intent to establish such restrictions in the applicable governing documents.

[1]           See, e.g., “Airbnb Is Seeing a Surge in Demand,” Los Angeles Times (June 7, 2020), available at https://www.latimes.com/business/story/2020-06-07/airbnb-coronavirus-demand; “California Is Banning Short-Term Rentals. Why Can’t Travelers Get Refunds?,” The New York Times (December 15, 2020), available at https://www.nytimes.com/2020/12/15/travel/airbnb-vrbo-refunds-travel-ban.html#commentsContainer.

Also, while beyond the scope of this update, public health orders such as California’s December 3, 2020 Regional Stay At Home Order may restrict non-essential travel and STVRs during the public health emergency.

[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.]

The Fifth District’s Friant Ranch Opinion Maintains the Split of Authority on Awarding a Partial EIR Decertification Remedy

Sierra Club v. County of Fresno (Case No. F079904)

Just in time for Thanksgiving, and as part of the continuing saga for the Friant Ranch project, the California Court of Appeal’s Fifth District issued its decision in Sierra Club v. County of Fresno on the question of whether the legal remedy of a partial EIR decertification was available to the lead agency and project applicant in a case where parts of the EIR were inadequate.  In deciding the legal issue before it, the Fifth District rejected a statutory interpretation that allows for partial decertification “because an EIR is either completed in compliance with CEQA or it is not.”  The Fifth District alternatively held that, even if CEQA allowed for partial decertification, the facts in the case at hand did not allow for it because the CEQA violations affected the statement of overriding considerations “and, thus, taint[ed] the certification of the EIR as a whole.”

As background, in 2018, the California Supreme Court decided a legal challenge to the Friant Ranch project, which is located on over 900 acres in the County of Fresno; proposes a mixed-use community with 2,500 residential units, 250,000 square feet of commercial land, and over 400 acres of open space; and has been in planning and processing for a decade.  The Supreme Court held the air quality analysis of the project EIR was inadequate and remanded the case back to the trial court.

On remand, the trial court granted the writ of mandate and ordered the County to set aside project approvals until the EIR complied with CEQA.  The County and applicant moved to vacate and reconsider the judgment and writ, arguing that public policy did not support full EIR decertification, CEQA mandated courts issue narrowly tailored remedies, and the facts of the case showed severability would be proper.  The motion was denied, and the applicant appealed, arguing the trial court’s broad order did not comply with Public Resources Code section 21168.9, which governs judicial remedies for CEQA violations.

The Fifth District’s analysis and rejection of a partial decertification remedy centered on two grounds.  First, based on statutory interpretation and prior precedent, the Fifth District concluded that partial certification of an EIR is not permitted under Public Resources Code sections 21100 and 21151, and therefore, by extension, no partial decertification can be granted as remedy.  Second, even if CEQA allows partial decertification, the Fifth District held that the project EIR’s defects could not be severed from the approvals the applicant sought to preserve during the corrective action because the CEQA violations affected the statement of overriding considerations.  (The portion of the opinion explaining why the defects could not be severed from the approvals is unpublished, creating a shroud of mystery as to the framework applied by the Fifth District when reaching a negative determination on severability.)

The Fifth District also briefly addressed the concern that full decertification of the EIR potentially would result in the agency and applicant having to relitigate the adequacy of the EIR’s impact analyses that were not at issue in prior legal challenges.  The Fifth District was satisfied that the doctrines of res judicata, collateral estoppel, and exhaustion of administrative remedies would provide sufficient protection against this concern.

In upholding the lower court’s decision, the Fifth District affirmed its continuing support for its prior decision in LandValue 77, LLC v. Board of Trustees of Cal. State University (2011) 193 Cal.App.4th 675 on the issue of partial EIR decertification.  As a result, the Fifth District continues to hold a position on this legal issue in seemingly direct conflict with the position taken on the issue by the Second and Fourth Districts.  Consequently, public agencies and applicants have a better chance at obtaining partial EIR decertification and preserving approvals unaffected by EIR defects in the Second and Fourth Districts, which generally view the remedy as limited to only the mandates necessary to achieve CEQA compliance.  (See Preserve Wild Santee v. City of Santee (2012) 210 Cal.App.4th 260 and Center for Biological Diversity v. California Department of Fish and Wildlife (2017) 17 Cal.App.5th 1245.)

[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.]

Important Modifications to Certain CEQA Requirements Due to the Ongoing State of Emergency as a Result of COVID-19

Executive Order N-80-20

In late September, California Governor Gavin Newsom once again addressed certain CEQA requirements as part of Executive Order N-80-20 (Order), citing the ongoing nature of the COVID-19 pandemic.[1]  Paragraph 6 of the Order extends the conditional suspension of certain filing, posting, and noticing requirements imposed by CEQA on lead and responsible agencies and project applicants, as such suspension was previously established in Executive Order N-54-20.[2]  If able, however, agencies and applicants may continue to comply with the applicable state requirements modified by the Order.

Specifically, under the Order, certain public notices do not need to be filed, posted, and made available to the public if an alternative method of compliance is achieved.  Such notices include notices of preparation of a negative declaration (ND), mitigated negative declaration (MND) and environmental impact report (EIR); notices of availability of a draft EIR; notices of intent to adopt an ND or MND; notices of exemption (NOE); and notices of determination (NOD) for an ND, MND, and EIR.  To comply with CEQA, if the agency or applicant is unable to satisfy the state law requirements, the Order allows them to pursue the following alternative methods, all of which must be satisfied: (1) posting of the notice on the agency’s website for the same length of time required by CEQA for physical posting; (2) submittal of notices to the State Clearinghouse’s portal; and (3) providing notice to all interested parties who requested notice as part of the outreach.

The Order remains in effect until modified or rescinded, or until the State of Emergency is lifted, whichever occurs sooner.

Further, since November 3, 2020, the California Office of Planning and Research (OPR), and specifically its State Clearinghouse, has required online submissions of most CEQA documents to satisfy the noticing requirements.[3]  In lieu of hard copies, the documents must be submitted electronically to the CEQAnet database.[4]  For purposes of commencement of the public review period or a statute of limitations, it is important to note the time the document is submitted.  For example, if a notice of availability of a draft EIR is submitted before 3:30 p.m., the public review period begins the same day.  OPR also has outlined specific submittal requirements based on the entity doing the submittal that must be followed for the submittal to be valid to satisfy CEQA.  Additional detail is available at the OPR website identified in footnote 3.

[1] The Order can be accessed at: https://www.gov.ca.gov/wp-content/uploads/2020/09/9.23.20-EO-N-80-20-COVID-19-signed.pdf.

[2] Order N-54-20 can be accessed at: https://www.gov.ca.gov/wp-content/uploads/2020/04/N-54-20-COVID-19-text-4.22.20.pdf.

[3] The user guide for online submissions is available at: https://opr.ca.gov/clearinghouse/ceqa/document-submission.html.

[4] The CEQAnet web portal is available at: https://ceqanet.opr.ca.gov/.

[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.]

POWER: A Cautionary Tale for Local Agencies on Categorical Classification of Permit Decisions

Protecting Our Water and Environmental Resources v. County of Stanislaus (POWER)

A recent California Supreme Court opinion in Protecting Our Water and Environmental Resources v. County of Stanislaus (POWER), issued August 27, 2020, is a cautionary tale for local agencies categorically classifying an entire group of permits as ministerial.  The case involved issuance of well construction permits by Stanislaus County (County) pursuant to an ordinance that incorporated State well construction standards and categorically classified a subset of those projects as ministerial.  Plaintiffs challenged this “pattern of practice,” alleging the well permit decisions pursuant to the ordinance were discretionary projects that required CEQA compliance.  Plaintiffs claimed that the ordinance allowed the County to deny the permit or to require modifications, which involved the exercise of subjective judgment and thereby rendered the action discretionary.  The trial court found all well permit issuances under the ordinance to be ministerial, ruling for the County, but the court of appeal reversed, holding permit decisions under one of the four State standards to be discretionary.  On review, the Supreme Court split the proverbial baby – it held that while classifying all permit issuances as ministerial violated CEQA, plaintiffs did not show that all well permit decisions were discretionary.  

As background, CEQA requires lead agencies to conduct environmental review for discretionary projects while exempting ministerial projects from such requirement.  Courts apply a “functional test” to refine the distinction between the two kinds of projects, focusing on the scope of an agency’s discretion.   A project is discretionary when an agency is allowed or required to exercise judgment or deliberation as to the project’s environmental impacts and can require modifications to respond to any concerns that may be identified by environmental review.  Ministerial projects, on the other hand, involve little to no personal judgment by the public official as to the project, and the permit applicant may compel approval by the agency if the project satisfies applicable statutes, ordinances, or regulations.  Agencies classify ministerial projects on either a categorical (i.e., the agency’s conferred authority is solely ministerial) or individual, case-by-case basis.  

In this case, the Court determined that the plain language of one of the four State well construction standards incorporated into the County’s ordinance – Standard 8.A – authorized the County to exercise discretion when deciding whether to issue the permit.  Specifically, Standard 8.A provides that adequate horizontal distance depends on many variables and “[n]o set separation distance is adequate and reasonable for all conditions.”  For the County’s determination for each well, it is required to conduct a detailed evaluation of existing and future site conditions.  The Court rejected the County’s argument that the well permit regulatory process as a whole did not allow the County to exercise its judgment and deliberation as contrary to CEQA, which requires environmental review of projects that contain elements of both ministerial and discretionary actions.  Likewise, the Court disagreed with the County that permit decisions were ministerial because the County’s discretion under Standard 8.A was limited – the County conceded it had authority under some circumstances to deny the permit or require modifications in well location.  

The Court also addressed the County’s argument that its interpretation of its own laws should be afforded deference.  Legal interpretation of State well construction standards, incorporated into the County’s ordinance, and therefore the determination of the scope and meaning of this ordinance was the job for the Court.  The County did not establish that the “situational” factors under Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1 warranted the Court’s adoption of the County’s interpretation.  

While the Court rejected the County’s position that well permit decisions pursuant to the ordinance were always ministerial, it emphasized that “[p]ermits issued under an ordinance are not necessarily discretionary simply because the ordinance contains some discretionary provisions.”  The ordinance in question only requires the County to apply Standard 8.A (the standard that conferred discretion) when there is a contamination source near a proposed well.  If no contamination source is identified, no discretion is involved and, as a result, not all well construction permits are discretionary.  The opinion concluded with the Court’s rejection of the County’s argument of increased costs and delays in permit issuance – an individual permit may still be classified as ministerial, and those classified as discretionary may not require full environmental review.  

In the POWER opinion, the Court issued thorough and detailed guidance to lead agencies.  Such agencies should re-evaluate their application of existing ordinances categorically classifying an entire group of permits as ministerial for compliance with POWER.  They should also carefully consider POWER when enacting and applying future ordinances with categorical permit classifications.  

[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.]

A New Dawn? CEQ Finalizes Updates to NEPA Regulations

On July 15, 2020, the Council on Environmental Quality (CEQ) announced its final rule (Rule) to “comprehensively update[], modernize[], and clarif[y],” for the first time in more than 40 years, the regulations that implement the National Environmental Policy Act (NEPA).[1]  NEPA, at its most basic, is one component of our national charter for the protection of the environment.  NEPA is a procedural statute that requires federal agencies to assess the potential environmental effects of proposed federal actions.[2]  The purpose of the Rule is to “codif[y] Supreme Court and other case law, update[] the regulations to reflect current technologies and agency practices, eliminate[] obsolete provisions, and improve[] the format and readability of the regulations.”[3]  The Rule was issued following CEQ’s investigation of the effectiveness and efficiency of the environmental review process and current NEPA regulations, as well as a public consultation process.[4]  The Rule has been, and continues to be, the subject of controversy.  Below, we summarize the key revisions to the Rule and their implications.

Process:  Timeline, Page Limits, Authorship and Public Engagement.  A number of revisions to the regulations are geared toward expediting the NEPA process.  The Rule presumptively limits the time for the preparation of environmental documents – two years for an Environmental Impact Statement and one year for an Environmental Assessment – and sets presumptive page limits for both documents.[5]  The Rule expands the role of the project applicant by eliminating restrictions on who can prepare environmental documents, while retaining the requirement that lead agencies independently review and evaluate the analysis.[6]  The Rule also requires agencies to solicit public input earlier in the process to facilitate public participation, and promotes cooperation and coordination among the agencies involved in the process.[7]

Definition of “Environmental Effect.”  Arguably, the most controversial substantive revision presented in the Rule is CEQ’s refinement of the definition of “environmental effect.”  CEQ struck references to direct, indirect, and cumulative effects and clarified, consistent with the U.S. Supreme Court’s precedent, that – to be analyzed – “effects must be reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternatives; a ‘but for’ causal relationship is insufficient to make an agency responsible for a particular effect under NEPA.”[8]  In response to comments that the elimination of the “cumulative effect” definition would preclude consideration of impacts of a proposed action on climate change, CEQ explains that the Rule does not preclude such consideration and the analysis of the impact on climate change will depend on specific circumstances of the proposed action.[9]  The argument against this revision is that, while the regulations do not preclude climate change analysis, they do not require it, which arguably undermines the environmental analysis.

Definition of “Major Federal Action.”  Among other noteworthy revisions is the Rule’s updated definition of what constitutes a “major federal action.”  To give meaning to all words in the NEPA statute consistent with principles of statutory interpretation, CEQ revised the regulations to apply to “major Federal actions significantly affecting the quality of the human environment” (42 U.S.C. section 4332(2)(C)), rather than to “non-major Federal actions that simply have some degree of Federal involvement.”[10]  Opponents of the Rule argue that this revision will erroneously eliminate certain projects, such as pipelines, bridges, and roads, from review under NEPA.

Categorical Exclusions.  In the Rule, CEQ also addressed categorical exclusions, more than 2,000 of which have been developed by federal agencies and are applied to 100,000 federal actions each year.  The Rule has been modified to provide that even if an “extraordinary circumstance” is present that would otherwise preclude use of a categorical exclusion, the agency may nevertheless categorically exclude the proposed action if it determines that there are “circumstances that lessen the impacts” or other conditions sufficient to avoid significant effects. The Rule also allows an agency to adopt another agency’s determination that a categorical exclusion applies when the proposed action is substantially the same.[11]

Alternatives Analysis.  With respect to agencies’ consideration of alternatives, the Rule continues to require agencies to analyze reasonable alternatives that would meet the need of the proposed action and would avoid impacts or mitigate them to less than significant.  However, CEQ limits reasonable alternatives to those that are “technically and economically feasible and meet[ing] the purpose and need of the proposed action” and requires that each alternative considers the goals of the applicant when the action involves a non-federal entity.[12]

Takeaways.  The supporters of the Rule – primarily industry stakeholders – praise the revisions for streamlining the NEPA process and making it more efficient, flexible, and less costly.  Similarly, President Trump’s Administration describes the Rule as necessary to overhaul outdated and cumbersome environmental regulations, and as a pathway to economic prosperity.  Opponents, on the other hand, sound the alarm on the Rule’s negative implications, arguing that it would worsen global greenhouse gas emissions, make infrastructure less safe, and preclude public input on certain projects.

The Rule is set to go into effect on September 14, 2020, unless challenged in court or altered by Congress.  Federal agencies and project applicants should exercise caution in applying the Rule until any legal challenges are resolved, and the time for Congress’ action to reverse it expires.

[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.]


 

[1] The NEPA regulations were first issued in 1978; for additional related information, see https://ceq.doe.gov/laws-regulations/regulations.html.

[2] The full text of CEQ’s Rule, titled an “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” was published in the Federal Register on July 16, 2020, and is available at: https://www.govinfo.gov/content/pkg/FR-2020-07-16/pdf/2020-15179.pdf.

[3] CEQ Fact Sheet: Modernizing CEQ’s NEPA Regulations, available at: https://ceq.doe.gov/docs/laws-regulations/ceq-final-rule-fact-sheet-2020-07-15.pdf.

[4] See https://ceq.doe.gov/laws-regulations/regulations.html; see also the Rule, pp. 9-10 and 21-24 at: https://www.whitehouse.gov/wp-content/uploads/2020/01/CEQ-NEPA-Regulations-Final-rule-Pre-publication-Version.pdf.

[5] Please see the Rule, pp. 82, 93 at: https://www.whitehouse.gov/wp-content/uploads/2020/01/CEQ-NEPA-Regulations-Final-rule-Pre-publication-Version.pdf.

[6] Id. at pp. 135-137.

[7] Id. at pp. 40-42, 137-139.

[8] Id. at pp. 160-166.

[9] Id. at pp. 165-166.

[10] Id. at pp. 169-172.

[11] Id. at pp. 41-42, 75-78.

[12] Id. at p. 192.

An Unacceptable Probability of Actual Bias: When Decisionmakers Cross the Line in Administrative Appeals

Petrovich Development Company, LLC v. City of Sacramento

The recently published opinion from the Third District Court of Appeal in Petrovich Development Company, LLC v. City of Sacramento (certified for publication on May 8, 2020) examines when city councilmembers impermissibly cross the line from neutral adjudicators to biased advocates when acting in a quasi-judicial role during their consideration of an appeal from an administrative body.

The case concerned an administrative appeal to the Sacramento City Council of the Planning Commission’s 8-3 decision to grant a conditional use permit for a gas station to Petrovich Development Company, LLC (Petrovich). Following an administrative appeal by two neighbors and the Sierra Curtis Neighborhood Association, the Planning Commission’s approval was overturned by the City Council with a 7-2 vote, with Councilmember Schenirer advocating against the gas station and making the motion to deny the requested conditional use permit. Petrovich sued, alleging among other things that Councilmember Schenirer demonstrated an “unacceptable probability of actual bias.” The trial court concurred that Schenirer was biased, and the appeal that culminated in the decision summarized here followed.

On appeal, the Court agreed Councilmember Schenirer demonstrated impermissible bias. While councilmembers are normally “policymakers and voices of their constituents,” when sitting in their quasi-adjudicatory capacity deciding an administrative appeal, councilmembers must be “neutral and unbiased,” meaning no conflict of interest, no prejudging of the facts, and freedom of prejudice against or in favor of any party.

Upon review of Schenirer’s conduct, the Court found the following actions did not demonstrate impermissible bias:

  • Membership in the Sierra Curtis Neighborhood Association.
  • Schenirer’s statement in a letter that the gas station would not fit in with the development as originally proposed, because the siting of the gas station was a matter of community concern and public importance.
  • The fact that Schenirer lived in a residential neighborhood adjacent to the proposed gas station as “[t]here was no evidence that Councilmember Schenirer’s particular residence would be impacted by the gas station more than any other in the neighborhood.”

However, the Court did find impermissible bias “in the run up to the City Council hearing and vote, [where] Councilmember Schenirer crossed the line into advocacy against the project.” Based on a number of emails and text messages, the Court specifically cited the following as evidence of impermissible bias:

  • There was evidence Schenirer was “counting—if not securing—votes” against the gas station and updating the Mayor to that effect. Schenirer had spoken to some of his colleagues about voting against the gas station, and had communicated to the Mayor’s advisor that he was confident he had a majority vote to deny the project prior to the hearing—which message the advisor conveyed to the Mayor by email.
  • Schenirer had prepared and circulated “talking points” to the Mayor and other councilmembers to assist in advocating against the gas station. The talking points were used by the Mayor at the hearing to carry the motion to deny the permit.
  • There was evidence Schenirer “coached” and assisted the opponents in how to prosecute the appeal. He texted one of the leaders to schedule a meeting to talk through the project prior to the hearing. He also offered up suggestions for meetings and prehearing presentations to other councilmembers. The “talking points” Schenirer prepared ended up in opponents’ opposition letters and emails to the gas station.
  • Schenirer organized the opposition and sequencing at the hearing. More specifically, Schenirer was the member to make the motion to reverse the Planning Commission decision in a planned sequence whereby Schenirer made the motion, which was then seconded by another councilmember, followed by talking points for denial.

For these reasons, the Court of Appeal held Schenirer acted as an advocate rather than a neutral and impartial decisionmaker. The proper course was for Schenirer to recuse himself from voting. Because he did not, Petrovich did not receive a fair hearing. The order invalidating the City’s decision and ordering a new hearing on appeal was affirmed.

[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.]