AB 819 – Changes to Encourage Online Public Access to CEQA Documents

Assembly Bill (AB) 819, signed into law on July 16, 2021, changes certain notice and filing requirements under the California Environmental Quality Act (CEQA).  As described in the legislative materials, AB 819 codifies the electronic public access requirements established by Governor Newsom via Executive Order N-54-20, which was issued early during the Covid-19 pandemic.

Previously, CEQA required agencies to utilize hard copies of environmental documents and notices, consistent with the technology limitations in place when CEQA was enacted 50 years ago.  Under the changes implemented by AB 819, agencies are now required to submit specified documents electronically and to post such documents on their websites.

AB 819, therefore, represents a small step towards modernizing CEQA.  The bill increases electronic availability of CEQA documents for the general public and provides electronic filing options for agencies.  The specific changes under AB 819 are outlined below.

  • A lead agency is required to mail or email notice of its determination that an environmental impact report (EIR) is required for a project to specified agencies. (CEQA, § 21080.4.)
  • A lead agency that is preparing an EIR or a negative declaration, or making a determination pursuant to section 21157.1(c), shall provide notice of that fact by posting the notice on the agency’s website (in addition to other pre-existing noticing procedures). (CEQA, § 21092.)
  • A lead agency must submit its draft EIR, negative declaration, or mitigated negative declaration in electronic format to OPR and post the document on its website. (CEQA, §§ 21082.1, 21091.)
  • A lead agency must accept comments via email and treat such comments as equivalent to written comments. (CEQA, § 21091.)
  • Notices required under CEQA sections 21080.4, 21083.9, 21092, 21108, 21152 and 21161 must be posted to the lead agency’s website, if one exists. (CEQA, § 21092.2.)
  • Notices of preparation and availability of an EIR, as required by CEQA sections 21080.4 and 21092, must be posted on the website of the county clerk. (CEQA, § 21092.3)
  • A notice of determination or exemption must be electronically filed by a state agency with OPR and available on OPR’s website for at least 12 months. (CEQA, § 21108.)
  • A notice of determination or exemption shall be electronically filed by a local agency with the county clerk (if that option is offered by the county clerk) and can now be posted on the county clerk’s website (in lieu of exclusively utilizing a physical posting). (CEQA, § 21152.)
  • An agency must file its notice of completion of an environmental document electronically with OPR. (CEQA, § 21161.)

The pre-existing CEQA law, as amended by AB 819, can be reviewed on the California Legislative Information website.

[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.]

SB 7: California Re-Enacts and Expands AB 900 CEQA Streamlining Provisions for Environmental Leadership Projects

California recently signed into law Senate Bill (SB) 7, which re-enacts and expands the California Environmental Quality Act (CEQA) streamlining provisions for “environmental leadership development projects” (ELDPs) that were originally adopted in the 2011 Jobs and Economic Improvement Through Environmental Leadership Act (Assembly Bill [AB] 900). AB 900 sunset on January 1, 2021; SB 7 extends the sunset through January 1, 2026. SB 7 also expands the types of projects that can be certified as ELDPs to include certain qualifying housing development projects, and provides revised procedures for the quantification and mitigation of greenhouse gas (GHG) emissions for eligible projects.

As additional background, while courts are required to give CEQA actions preference over all other civil actions, CEQA imposes no deadline for a court to render a decision. AB 900 established and SB 7 carries forward expedited CEQA judicial review procedures for ELDPs. Specifically, if the Governor certifies a project as an ELDP, any court action (including any appeals) challenging the certification of the environmental impact report (EIR) or the approval of the project must be resolved within 270 days, to the extent feasible.

Eligible Leadership Project Types

The following project types are eligible to be certified as ELDPs under SB 7:

  • Non-industrial projects (as defined to include residential, retail, commercial, sports, cultural, entertainment, or recreational uses) that are certified as LEED gold or better and, where applicable, achieve a 15-percent greater standard for transportation efficiency than for comparable projects. These projects must be located on an infill site, and must be consistent with specified policies in any applicable sustainable communities strategy (SCS) or alternative planning strategy (APS). In addition, these projects must result in a minimum investment of $100,000,000 in California upon completion of construction.
  • Clean renewable energy projects and clean energy manufacturing projects.
  • New: Housing development projects that meet all of the following conditions: (i) the project is located on an infill site; (ii) the project is consistent with specified policies in any applicable SCS or APS; (iii) the project will result in a minimum investment of $15,000,000, but less than $100,000,000, in California upon completion of construction; (iv) at least 15% of the project is dedicated as affordable housing, unless an applicable local inclusionary zoning ordinance establishes a higher minimum percentage; (v) no part of the project shall be used for a short-term vacation rental unit (less than 30 days), or designated for hotel, motel, or other transient lodging use (however, residential hotels for very low and low income housing are permitted); and (vi) no part of the project shall be used for manufacturing or industrial uses. A “housing development project” is defined to include a project for residential units only; mixed-use development consisting of residential and nonresidential uses, with at least two-thirds of the square footage designated for residential use; or, transitional or supportive housing.

Additional Conditions for Certification

As the law is now in effect, the Governor may certify an eligible project for CEQA streamlining, before the lead agency certifies the final EIR for the project, if multiple conditions are met, including the following key conditions:

  • For construction labor requirements, the project must pay prevailing wages, and — as a new requirement added in SB 7 — the project must use a “skilled and trained workforce,” for all construction work.
  • The project must not result in any net additional emission of GHGs, including GHG emissions from employee transportation. For eligible leadership projects other than housing developments, GHG mitigation measures must prioritize direct project emissions reductions and local direct emissions reductions, before relying on carbon offsets. The intent is to maximize environmental and public health benefits to those people who are most impacted by the project.
  • Multi-family residential projects certified as an ELDP must provide unbundled parking, such that private vehicle parking spaces are priced and rented or purchased separately from dwelling units, except for units subject to affordability restrictions where the cost of parking spaces cannot be unbundled.
  • The project applicant must agree to pay the costs of the trial court and the court of appeal in hearing any case challenging the project, including payment of costs for the appointment of a special master if deemed appropriate by the court.
  • The project applicant must agree to pay the costs of preparing the administrative record for the project. In addition, the administrative record must be prepared concurrently with the review and consideration of the project.

Takeaways

In 2011, AB 900 established expedited CEQA judicial review procedures for a limited number of projects — large-scale projects meeting extraordinary environmental standards and providing significant jobs and investment. Based on the legislative materials, from 2012–2020, 17 projects were certified under AB 900. Of these, only two projects have been built to-date, and neither includes housing.

Seeking to help address California’s affordable housing crisis, SB 7 somewhat expands AB 900 to apply to “smaller” housing development projects. However, eligibility still remains restrictive, particularly with respect to the strict labor and prevailing wage requirements. Thus, the real-world impact of expanding AB 900 remains to be seen. For example, the SB 7 legislative materials note that many infill housing projects are eligible for existing statutory or categorical exemptions under CEQA, without having to meet the additional conditions, process, and expense associated with AB 900 / SB 7. As a result, the statutory scheme may be more suited for large projects “with teams of attorneys and consultants,” rather than smaller housing projects that may be exempt from CEQA or eligible for a negative declaration, and not required to prepare an EIR, under current law.

Finally, as to GHG emissions, SB 7 reflects California’s increasing focus on achieving local clean air co-benefits and reducing the reliance on carbon offsets, even though offsets are expressly allowed by CEQA Guidelines section 15126.4(c). The bill prioritizes on-site and local direct GHG emissions reductions over offsets for all eligible project types (but for specified housing development projects). This change was evidently made, at least in part, in response to the Golden State Warriors arena (Chase Center) project in San Francisco, which is one of the two completed AB 900 projects. In the Chase Center project, to offset its construction emissions, the Warriors purchased offsets sourced from Florida at a cost of $3.50/ton. The SB 7 legislative materials observed that the total cost of offsetting construction emissions for the $1.4 billon Chase Center was $39,869, contrasting that figure with the $52,800 cost of a single courtside season ticket in the 18,064-seat Chase Center.

[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.]

Lead Agency Prevails Over Challenge to its Mitigated Negative Declaration Despite Unfavorable Standard of Review

Newton Preservation Society et al. v. County of El Dorado
(2021) (Case No. C092069)

On June 16, 2021, the California Court of Appeal for the Third District issued its decision in Newton Preservation Society et al. v. County of El Dorado (Case No. C092069), in which the Court upheld a mitigated negative declaration (MND) despite the “low threshold” review standard.

As background, the County of El Dorado certified an MND for and approved the Newton Road Bridge project – a project consisting of the replacement of an existing bridge.  Petitioners challenged the validity of the MND, arguing the project would cause significant impacts to fire evacuation routes thereby requiring preparation of an environmental impact report (EIR).  The trial court denied the petition and upheld the MND.  Petitioners appealed and the Court of Appeal ultimately affirmed the trial court’s decision.

An EIR, as opposed to an MND, is required if substantial evidence in the whole record supports a fair argument that a project may have a significant effect on the environment.  This is considered a “low threshold” test and accords no deference to the lead agency’s determination.  It is often difficult for the lead agency to prevail under this standard.

In this case, petitioners argued substantial evidence supported a fair argument that the project will have a significant impact on resident safety and emergency evacuation because, when the bridge is closed while under construction, residents would be unable to safely evacuate.[1]  The “substantial evidence” supporting petitioners’ argument consisted of testimony from local residents and a retired firefighter, who stated residents would be unable to safely evacuate when the bridge was under construction.

The Court of Appeal first explained that petitioners erroneously framed the fair argument test.  “The question is not whether substantial evidence supports a fair argument that the proposed project will have significant impacts on resident safety and emergency evacuation.  As explained ante, the question is whether the project may have a significant effect on the environment. … Thus, the question before us is whether the residents’ comments upon which petitioners rely (given their burden on appeal) constitute substantial evidence supporting a fair argument that the project may have a significant effect on the environment or may exacerbate existing environmental hazards.”  (Italics in original.)

Public opinion may provide substantial evidence in certain circumstances.  However, interpretation of technical or scientific information requires an expert evaluation and public testimony on such matters does not constitute substantial evidence.  Here, the Court determined the local residents’ “dire predictions” were not sufficient to constitute substantial evidence.

The Court distinguished the residents’ testimony from cases where public opinion did constitute substantial evidence.  The Court explained, “[i]n contrast to the public comments in those three cases, here, the comments lacked factual foundation and failed to contradict the conclusions by agencies with expertise in wildfire evacuations with specific facts calling into question the underlying assumptions of their opinions as it pertained to the project’s potential environmental impacts.”  (Italics in original.)

Overall, this opinion reminds readers that public opinion is not always enough to win a challenge against an MND and speculative comments lacking factual foundation do not equate to substantial evidence.

[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]           Petitioners presented three additional issues for appeal; however, those are addressed by the Court in the unpublished portion of its opinion.  Accordingly, this summary only discusses the published portion of the opinion, which concerns the evacuation issue.

Housing Crisis No More: Ruegg & Ellsworth v. City of Berkeley Is A Step Toward Addressing the State’s Housing Shortage

Ruegg & Ellsworth v. City of Berkeley
(2021) (Case No. A159218)

A recent Court of Appeal decision, Ruegg & Ellsworth v. City of Berkeley, is a win for land developers and a step toward solving the housing crisis in California.  In Ruegg & Ellsworth, filed April 20, 2021, California’s First District Court of Appeal reversed the trial court’s denial of the petition filed by the developer of a mixed-use project.  The project was rejected by the city after the developer sought approval under the streamlined, ministerial process provided for in Senate Bill No. 35 (SB 35), which added section 65913.4 to the Government Code effective January 1, 2018.  For housing developments in the state, this case signals judicial deference will be given to the strong legislative intent to address the housing shortage.

Senate Bill 35

If a locality has failed to provide its share of “regional housing needs, by income category,” section 65913.4 requires a “ministerial approval process” for certain affordable housing projects that satisfy all of the “objective planning standards” enumerated in the statute.  In addition to the objective planning standards, the project must not be located on a site where the development would require the demolition of “a historic structure that was placed on a national, state, or local historic register.”  SB 35 is a measure adopted by the state legislature to reduce the housing shortage, and affordable housing shortage in particular.

The City’s Denial of Project Application

 The city denied the developer’s application to build 260 dwelling units, 50 percent of which would be affordable to low-income households, over approximately 27,500 square feet of retail space and parking.  The city’s denial letter stated that SB 35 could not constitutionally be applied to the project because of the city’s right, as a charter city, to govern itself with regard to municipal affairs, including protection of local landmarks.  And, even if SB 35 applied, the city maintained the project did not satisfy the requirements for ministerial approval due to the fact that the project might require demolition of historic structure that has been placed on a state and local historic register.  The city’s decision on this point was linked to its finding that the project is in an area (the West Berkeley Shellmound) designated a city landmark and listed in the state register of historical resources.

No Deference to the City’s Historic Structure Determination

The court did not agree with the trial court’s application of a deferential standard of review to the city’s determination that the project will require demolition of a historic structure.  The court found compelling the developer’s position that the standard of review applied by the trial court “effectively nullifies the legislative intent in section 65913.4 by insulating from review the fact-finding underlying an agency’s determination whether its ministerial duty to approve a project is triggered.”

The court reasoned that the deferential standard was applied in error because whether the Shellmound is a “structure” within the meaning of SB 35 is a legal issue the court reviews de novo, and whether the Shellmound exists on the project site is a question of fact.  However, the court did not go as far as defining the applicable standard because the record did not support the city’s conclusion that the project would require demolition of a historic structure placed on a historic register.  Importantly, the landmark designation for the area does not include any above ground buildings or structures; instead, it includes “the site itself and all items found subsurface including artifacts from the earliest native habitation, such as but not limited to native tools, ornaments, and human burials.”  Despite the city’s and intervenor’s creative attempts at interpreting and defining a “structure,” the court stated that while the Shellmound is an important historical and cultural resource, designated by the city as a “site,” SB 35 uses the term “structure,” and not “resource” or “site,” and the legislature is “certainly aware of the distinctions between these terms.”

The court also rejected the intervenor’s argument that tribal cultural resource protections under Assembly Bill 831 should be applied to the project even though they were enacted after the project application was submitted.

The City Is Not Exempt from SB 35

The city also argued that applying SB 35 would impermissibly interfere with the city’s “home rule” authority over historic preservation and the city was therefore exempt from SB 35.  To determine whether a matter comes within a charter city’s home rule authority, courts analyze four issues: whether the city ordinance at issue regulates an activity that can be characterized as a municipal affair; whether there is an actual conflict between local and state law; whether the state law addresses a matter of statewide concern; and whether the law is reasonably related to resolution of that concern and narrowly tailored to avoid unnecessary interference in local governance.  All parties and the court agreed that local historic preservation is a municipal concern, and the city’s landmark preservation ordinance is in a direct conflict with SB 35.  The legislative history and intent of the state housing laws in general, and SB 35 in particular, as well as applicable case authority, indicate that access to affordable housing is a matter of statewide concern.

The city argued that the statewide interest in housing does not automatically translate into a statewide interest in eliminating local agency authority of landmark designation.  The court rejected this framing of the issue and explained that the constitutionality of section 65913.4 does not turn on there being a statewide interest in limiting local historical preservation authority, but rather on whether the statewide interest in increasing affordable housing sufficiently justifies the legislation’s impact on that authority.  The relevant question, therefore, is whether the statute is reasonably related to resolving the statewide interest it addresses and does not unduly interfere with the city’s historical preservation authority.  The court answered the question with a “yes” based on the long history of legislative attempts to address the state’s housing crisis and frustration with local governments’ interference with that goal, and the highly subjective nature of historical preservation.

Similarly, as to the city’s argument that SB 35 interferes with its land use authority, the court held that the extent to which SB 35 interferes with local regulation of commercial uses appears to be fairly minimal, and incidental to the statute’s purpose of facilitating development of affordable housing.

The Court Ruled Against the City on Other Issues

Lastly, the court addressed whether SB 35 applies to mixed-use development.  The court followed the statute’s purpose, which is to expedite processing of affordable housing development, as well as the purpose of the state housing laws in general, and held SB 35 applies to mixed-use development.  The court also rejected the city’s argument that it could rely on its affordable housing ordinance to deny ministerial approval to a project providing 50 percent low-income housing because the city’s argument would frustrate the purpose of SB 35.  And, the court concluded the city’s traffic impact reason for denial, which was not specifically raised in the pre-denial letter required by SB 35 to be provided to the applicant, was waived.

[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.]

Court of Appeal Upholds EIR for Expansion of Rock Quarry Operation

Stop Syar Expansion v. Cty. of Napa
(No. A158723) __ Cal.App.5th __ [2021 WL 1596347], as modified (Apr. 23, 2021)

The California Court of Appeal (First Appellate District) recently delivered a victory to the County of Napa in a long-running challenge to the expansion of a rock quarry located outside the City of Napa. The published portion of the opinion focuses on the California Environmental Quality Act (CEQA) requirements for environmental impact reports (EIRs) to discuss any inconsistencies between the proposed project and applicable planning documents. The opinion also provides a detailed overview of general CEQA principles, including the standard of judicial review of EIRs and the requirement for petitioners to exhaust their administrative remedies.

As background, in 2008, the rock quarry operator proposed to expand the existing 472-acre operation by 291 acres, and to increase quarry production from 1 million to 2 million tons annually. After more than seven years of environmental review and numerous hearings, in October 2015, the County Planning Commission certified the project’s final EIR. The Planning Commission also approved a modified version of the project, which included an expansion “half the size originally sought” — an expansion by 106 acres and an increase in production to 1.3 million tons annually. The approval was also subject to more than 100 pages of conditions and mitigation measures.

The petitioner in this case, Stop Syar Expansion (SSE), appealed the EIR certification and project approvals to the County Board of Supervisors, claiming deficiencies “in a multitude of respects.” The County Board then conducted nearly a year of additional environmental review and hearings and, in a 109-page decision, rejected SSE’s appeals, certified the EIR, and approved a further modified project. SSE then filed a lawsuit challenging the certification of the EIR under CEQA. After “winnowing down” its claims, SSE asserted 16 alleged deficiencies with the EIR. The trial court denied the petition in a 42-page ruling, and the Court of Appeal affirmed, in a partially published 86-page opinion.

General Plan Consistency

The published portion of the Stop Syar Expansion opinion focuses on SSE’s claim that the EIR failed to address the project’s asserted inconsistencies with the County’s general plan. As an initial matter, the Court of Appeal agreed with the County and quarry operator that whether a proposed project is consistent with the applicable planning documents “is not a CEQA issue” and, therefore, the petitioner was required to raise this issue by way of a separate cause of action (or separate proceeding) for ordinary mandamus, under Code of Civil Procedure section 1085.

Specifically, in the context of planning and land use law, every California county and city is required to adopt “a comprehensive, long-term general plan for the development of the county or city.” (Gov. Code, §65300.) The propriety of virtually any local decision affecting land use and development depends upon consistency with the applicable general plan and its elements. As to the standard of judicial review, when courts review an agency’s decision that a project is consistent with its own general plan, they accord “great deference” to the agency’s determination. This is because the agency which adopted the general plan policies in its legislative capacity has “unique competence” to interpret those policies when applying them in its adjudicatory capacity. A reviewing court’s role is simply to decide whether the agency “considered the applicable policies and the extent to which the proposed project conforms with those policies.” Courts can reverse an agency’s finding of general plan consistency only if the petitioner shows the determination was unreasonable.

Here, the County determined the rock quarry expansion project is consistent with the general plan. The petitioner SSE did not challenge this finding based on the applicable standard of review. Instead, it contended there was a CEQA violation because the EIR failed to disclose alleged inconsistencies with the general plan, which violated CEQA’s informational requirement to “adequately inform the public and decisionmakers” about the project’s potential impacts.

The CEQA Guidelines require an EIR to discuss any inconsistencies between the proposed project and applicable general plans, specific plans, and regional plans. (14 Cal. Code Regs., §15125(d).) Thus, while there is no requirement that an EIR itself be consistent with the relevant general plan, it must identify and discuss any inconsistencies between the proposed project and the governing general plan. Such inconsistencies may be evidence of a significant environmental effect. However, no analysis is required if the project is consistent with the relevant plans.

The Stop Syar Expansion opinion shows that if a petitioner alleges an EIR fails to discuss general plan inconsistencies in violation of CEQA Guideline §15125(d), the petitioner must first establish that the proposed project is inconsistent with the applicable general plan. To do so, it must meet the “highly deferential” standard of review applicable to an agency’s consistency determination under the general planning and land use law, discussed above. There is no separate standard of review to determine “inconsistency” for purposes of alleged violations of CEQA’s informational requirement. SSE’s attempt to create a separate CEQA standard failed.

The Court also considered — and rejected — the merits of SSE’s general plan consistency argument. The Court found that the project’s consistency with the general plan was addressed at length “throughout the environmental review process.” For example, each technical section of the EIR included a detailed discussion of consistency with general plan policies. The County also prepared a “General Plan Consistency Analysis” that was considered during proceedings before both the Planning Commission and Board of Supervisors. The Court found that this provided ample basis for public discussion of the project’s consistency with the general plan and informed decision-making. In fact, the record showed that the general plan policies contemplate and allow rock aggregate mining on the subject property — neither a general plan land use re-designation nor a rezoning of the property are necessary to accommodate the expansion of the quarry, which has been in existence since the 1800s.

In short, Stop Syar Expansion makes clear that “inconsistency” for CEQA purposes is no different than for purposes of general planning and land use law. To determine if a proposed project is “inconsistent” with an applicable general plan, specific plan, or regional plan, courts will give great deference to the agency’s determination of consistency, and petitioners bear a heavy burden to show that the agency’s interpretation of its own plan was in error — courts will decline to “micromanage” such decisions.

CEQA “101” – Standard of Review and Issue Exhaustion

Finally, as mentioned above, the partially published Stop Syar Expansion opinion also provides a detailed overview of general CEQA principles.

First, the opinion enumerates the standard for judicial review where petitioners challenge the content and analysis of an EIR. Most notably: (i) an EIR is presumed adequate and the petitioner has the burden of proving otherwise; (ii) the court’s inquiry extends only to whether there was a prejudicial abuse of discretion, and courts accord greater deference to the agency’s substantive factual conclusions than to alleged procedural errors; and (iii) the ultimate inquiry is whether the EIR includes enough detail “to enable those who did not participate in its preparation to understand and to consider meaningfully the issues raised by the proposed project.” Courts look “not for perfection but for adequacy, completeness, and a good faith effort at full disclosure.” (CEQA Guideline, §15151.)

In addition, the opinion provides a comprehensive overview of the “exhaustion of administrative remedies” doctrine. Before a CEQA challenge may be presented to a court, the petitioner must first exhaust the remedies available with the administrative agency. The essence of the exhaustion doctrine affords the public agency an opportunity to receive and respond to articulated factual issues and legal theories before its actions are subjected to judicial review. The petitioner has the burden of proof to show exhaustion occurred. In this regard, string-cites to the record without explanation is not sufficient — the petitioner must show that the public agency was “fairly apprised” of the asserted noncompliance with CEQA.

Further, whether exhaustion has occurred will depend upon the procedures applicable to the public agency in question. Stop Syar Expansion involves the fairly common scenario where the local ordinance provides for an administrative appeal ­— the Planning Commission’s actions are appealable to the County Board. In such a case, the failure to appeal the Planning Commission’s actions in the manner prescribed by the ordinance is a failure to exhaust administrative remedies. Thus, compliance with the local administrative procedures is key to establishing standing to bring a CEQA lawsuit.

Key Takeaways

Stop Syar Expansion is among the key opinions discussing the interplay between CEQA and the requirement that land use decisions must be consistent with the applicable general plan. The opinion also provides a great resource for those looking for an in-depth discussion of core CEQA principles, such as the standard of review for challenges to an EIR, and the jurisdictional requirement to exhaust administrative remedies before a CEQA lawsuit may be brought.

[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.]

Court of Appeal Upholds State Air Resources Board Regulations Imposing Fees on Manufacturers

American Coatings Association v. State Air Resources Board
(2021) (Case No. C085042)

California Health and Safety Code section 39613 (the Code) requires the State Air Resources Board (the Board) to impose fees on manufacturers who sell consumer products and architectural coatings that emit volatile organic compounds (VOCs) of 250 tons or more per year.  To implement this statute, the Board adopted regulations (the Regulations) that impose a uniform fee on the covered manufacturers.  American Coatings Association, Inc. (the Association) filed a complaint for declaratory and injunctive relief and a petition for writ of mandate, challenging the constitutionality of the Code and the Board’s implementing Regulations.  The trial court denied the Association’s petition and complaint and, on April 12, 2021, the Court of Appeal for the Third District issued its decision (American Coatings Association, Inc. v. State Air Resources Board (2021) Case No. C085042) affirming the trial court’s judgment.

The Association’s petition sets forth various causes of action, including: (1) the Code and Regulations violate due process because the manufacturers pay more than their fair share under the fee; (2) the Code and Regulations violate equal protection by drawing an arbitrary classification between manufacturers; (3) the Code and Regulations violate Proposition 13 because the fees are actually taxes; (4) the Code is an unconstitutional delegation of legislative power to the Board; and (5) the fees violate due process and equal protection because the fees are arbitrary and capricious and do not relate to any reasonable legislative goal.  Ultimately, the Court held the Association failed to meet its burden to show the fees were unreasonable; the Code was not an unlawful delegation of power; and the Code did not violate due process or equal protection laws.

Proposition 13 requires any change in a state tax to be passed by a two-thirds majority of the Legislature.  Thus, if the fee imposed by the Regulations were a tax, it would be illegal because the Regulations were not passed by a two-third Legislative majority.  Whether the Regulations constitute a tax is a question of law, which the Court decided under an independent standard of review.  Although the distinction between a fee and a tax is “frequently blurred,” the Court considers whether the fees would exceed the cost of administering the permit program, whether the fees generate excess revenue, and whether any class of fee payers is shouldering too large a portion of the associated regulatory costs.  In this case, the Court found there was no evidence that the funds were spent for purposes unrelated to the regulatory activities to which the fees were charged; the Board’s fee calculation methodology was reasonable; and the fees on the manufacturers bore a reasonable relationship to the manufacturer’s pollution impacts.  Overall, the Association failed to meet its burden and show why the Board’s Regulation was unreasonable.

The Court then held the Code was not an unconstitutional delegation of power to the Board.  The Code does not give the Board authority to regulate; rather, the Code allows the Board to establish a fee to support its regulatory activities that are authorized by other statutes.  Moreover, the Code requires the Board to use the collected fees for specific mitigatory programs.  The Court concluded, “[w]e invalidate a legislative enactment as an unlawful delegation of legislative power only in the event of a total abdication of that power, through failure either to render basic policy decisions or to assure that they are implemented as made.  [Citation.]  We find no such abdication.”

Lastly, the Court addressed the Association’s due process and equal protection claims.  Under the rational basis standard of review, the Court upheld the trial court’s determination that the Code and Regulations did not violate due process or equal protection.  The Court explained, “[t]he disparities the Association points to as violating equal protection and due process are fundamentally the Legislature’s decision to exempt sources that emit less than 250 tons and the Board’s decision to impose a single per-ton rate … We cannot find there was no reasonable basis for treating affected manufacturers, including the Association, differently than other sources of emissions.”

Overall, the Court of Appeal’s decision reflects a deferential standard of review, which favors the agency’s action.  To overcome this standard, a challenger needs to make a strong prima facie showing of unreasonableness or lack of any rational basis in the agency’s action.

[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.]

An Environmental Law and Public Records Case is the First Majority Opinion Written by Newly-Minted U.S. Supreme Court Justice Amy Coney Barrett

United States Fish & Wildlife Service v. Sierra Club, Inc.
(U.S. Mar. 4, 2021) —S.Ct.— (No. 19-547)

In a 7-2 decision (Breyer, Sotomayor dissenting), the U.S. Supreme Court held that draft environmental opinions prepared by the U.S. Fish and Wildlife Service and National Marine Fisheries Service (together, “Services”) are exempt from public disclosure under the “deliberative process” exemption to the federal Freedom of Information Act (FOIA). The deliberative process exemption shields documents that reflect an agency’s preliminary thinking about a problem, as opposed to its final decision. This decision is instructive to document requests under the California Public Records Act, which is modeled on the FOIA. (See Michaelis, Montanari & Johnson v. Superior Ct. (2006) 38 Cal.4th 1065, 1076.)

The FWS v. Sierra Club case involves a proposed rule by the U.S. Environmental Protection Agency (EPA) related to the design and operation of “cooling water intake structures,” which draw large volumes of water from various sources to cool industrial equipment. The water withdrawn by these structures typically contains fish and other organisms that can become trapped in the intake system and die.

When an agency plans to undertake an action that might “adversely affect” a protected species, the agency must consult with the Services before proceeding, pursuant to the federal Endangered Species Act. The goal of the consultation is to assist the Services in preparing an official “biological opinion” on whether the agency’s proposal will jeopardize the threatened or endangered species — these opinions are known as “jeopardy” or “no jeopardy” biological opinions. (50 CFR §402.14(h)(1)(iv).)

Therefore, beginning in 2012, the EPA consulted with the Services about its proposed rule. The EPA sent the Services a draft of the proposed rule in November 2013. Staff members at the Services completed draft biological opinions in December 2013. The draft biological opinions concluded that the proposed rule was likely to jeopardize certain species, and identified possible reasonable and prudent alternatives that the EPA could pursue. Decisionmakers at the Services neither approved the drafts nor sent them to the EPA, which was still debating key elements of the rule. Instead, the Services “shelved” the draft opinions and extended the consultation period. Then, in March 2014, the EPA sent the Services a new proposed rule that differed significantly from the 2013 version. The Services determined that the revised rule was unlikely to harm any protected species. As such, the Services issued a joint final “no jeopardy” biological opinion, thereby terminating the formal consultation. The EPA issued its final rule that same day.

The Sierra Club submitted FOIA requests for records related to the Services’ consultations with the EPA. The Services turned over thousands of documents, but invoked the deliberative process exemption for others ­— including the draft biological opinions analyzing the EPA’s 2013 proposed rule. The Services asserted that, as drafts, the withheld documents were necessarily nonfinal and therefore protected. The Sierra Club sued the Services, alleging that the withheld documents were subject to disclosure under the FOIA. The Supreme Court disagreed.

The FOIA requires that federal agencies make records available to the public upon request, unless those records fall within one of nine exemptions. (5 U.S.C. §522(b).) Exemption 5 incorporates the privileges available to government agencies in civil litigation, such as the deliberative process privilege, attorney-client privilege, and attorney work-product privilege. This case concerns the “deliberative process” privilege, which protects from disclosure documents generated during an agency’s deliberations about a policy. Under this privilege, pre-decisional deliberative documents are exempt from disclosure. However, documents reflecting a final agency decision and the reasons supporting it are not protected and must be disclosed. The deliberative process privilege protects agencies from being forced to operate in a “fishbowl.” The privilege is rooted in “the obvious realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news.”

In FWS v. Sierra Club, the Supreme Court held that the Services’ draft biological opinions were protected from disclosure under the deliberative process privilege. To determine whether the privilege applies, a critical question is whether the public agency treated the documents as their final view on the matter. Courts must evaluate the documents “in the context of the administrative process” that generated them. Here, the draft biological opinions were generated as part of a consultative process that specifically contemplates further review. The Services share their draft biological opinions with the action agency — in this case, the EPA — and generally may not issue final opinions “while the draft is under review” by the action agency. (50 CFR §402.14(g)(5).) Also, the Services did not treat the draft biological opinions as final, because they neither approved the drafts nor sent them to the EPA. Instead, the decisionmakers concluded that “more work needed to be done” and extended the consultation with the EPA. Accordingly, the draft biological opinions were just that — opinions that were subject to change.

The Court opinion notes that a document is not “final,” and thus subject to disclosure, solely because nothing else follows it. Sometimes a proposal “dies on the vine.” Some ideas are discarded, yet documents discussing such dead-end ideas cannot be described as reflecting the agency’s chosen course. What matters is whether the document communicates a policy on which the agency has settled. If so, it is subject to public disclosure. Here, the Services’ draft biological opinions proved to be their “last word” about the 2013 version of EPA’s proposed rule. But the opinions were only “last” because they died on the vine. Further consultations with the Services prompted the EPA to alter key features of its 2013 proposal, so there was never a need for the Services to render a definitive judgment about it.

In short, in FWS v. Sierra Club, the Court found that the deliberative process exemption protects from public disclosure in-house agency draft documents that do not represent an agency’s final view on a matter. And in this case, the consultation that generated deliberative process drafts protected from production in response to a FOIA request worked as it should have: The Services and the EPA consulted about how a proposed rule would affect aquatic wildlife until the EPA settled on an approach that would not jeopardize any protected species.

[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.]

County Water District’s Suits Against Regional Water Quality Control Board Cover Range of Legal Issues

Malaga County Water District v. Central Valley Regional Water Quality Control Board
(2020) 58 Cal.App.5th 396

Malaga County Water District v. Central Valley Regional Water Quality Control Board
(2020) 58 Cal.App.5th 418

Malaga County Water District v. Central Valley Regional Water Quality Control Board
(2020) 58 Cal.App.5th 447

In a series of three published decisions, the Court of Appeal for the Fifth District reviewed Malaga County Water District’s (“Malaga”) claims challenging the issuance of a discharge permit and administrative civil liability penalty levied by the Central Valley Regional Water Quality Board (“Board”).  These three decisions discuss various legal issues, ranging from improper delegation to underground regulations.  When viewed collectively, the three decisions illuminate a series of errors made by the Board in administering its regulatory responsibilities.

Delegation by the Board

In the first case,[1] Malaga challenged its discharge permit, arguing it was wrongfully modified by the Board’s executive officer, resulting in improper delegation under Water Code section 13223.  The provision in the discharge permit at issue was one that allowed the executive officer of the Board to increase the effluent discharge limitation in the permit from 0.49 mgd to 0.85 mgd.  Water Code section 13223 allows the Board to delegate authority to its executive officer, but prohibits delegating authority to issue, modify, or revoke any waste discharge requirement.  Relying on federal case law, the Court determined that changes to effluent discharge limitations in a discharge permit are “modifications” to a permit.  Thus, the executive officer’s authority to change the effluent discharge limitation on Malaga’s permit was improper delegation under Water Code section 13223.

Hearing Procedures as an Improper Underground Regulation

In the second case,[2] Malaga sought review of an administrative civil liability penalty imposed on it by the Board, arguing that the Hearing Procedures document (“Procedures”) used to govern the administrative hearing was an improper underground regulation.  The Procedures at issue contained information regarding the structure and procedure of the administrative hearing, including sections titled Introduction, Hearing Participants, Hearing Time Limits, Documents in Evidence and Availability of Board Files, Submittal of Evidence, Prohibition on Surprise Evidence, Contact Information, and Important Deadlines.  The Procedures stated generally, “[w]ith the exception of the ‘Hearing Time Limits’ section, the Board Chair has approved this Hearing Procedure for the adjudication of [administrative civil liability] matters.”

To determine whether the Procedures were an underground regulation, the Court considered two factors: (1) whether the Board intended the Procedures to apply generally; and (2) whether the Procedures governed the agency’s procedure.  Here, the Court concluded that because the majority of the Procedures were pre-approved and based on a preexisting template, the Procedures were intended to apply generally.  As for the second factor, the Board argued the Procedures merely implemented already adopted regulations.  The Court disagreed, finding that the Procedures governed the agency’s procedure because the Procedures did not specifically implement or utilize the only reasonable reading of the already adopted statutory regulations.

Laches in Administrative Proceedings

In the third case,[3]  Malaga argued the Board wrongly determined that laches was not a defense to the administrative proceeding.  The Court reviewed this purely legal issue under the de novo standard of review.  First, the Court established that laches is an equitable defense that can apply in administrative proceedings when two requirements are met: unreasonable delay and prejudice from that delay.  Second, the Court determined that the three-year statute of limitations that exists for similar water-related claims could be used here to establish a three-year time period before allowing the burden to shift to the agency to demonstrate delay in enforcement.  In other words, after three years elapses, the burden to prove there was unreasonable delay shifts from the party raising the laches defense to the agency.  In this case, over three years had passed before agency enforcement of administrative liability.  Therefore, the Court held the Board wrongly determined laches could not be asserted as a defense in this administrative proceeding even if Malaga would have a hard time proving, and ultimately succeeding, on the defense.

[1]           Malaga County Water District v. Central Valley Regional Water Quality Control Board (2020) 58 Cal.App.5th 396.

[2]           Malaga County Water District v. Central Valley Regional Water Quality Control Board (2020) 58 Cal.App.5th 418.

[3]           Malaga County Water District v. Central Valley Regional Water Quality Control Board (2020) 58 Cal.App.5th 447.

[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.]

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.]