May 24, 2022

California Court Decries CEQA Abuse: "Something Is Very Wrong with This Picture"

Court of Appeal Decision Sets Precedent Helpful to Projects Protected by Housing Accountability Act
Holland & Knight Alert
Bradley B. Brownlow | Jessica Laughlin

Highlights

  • In a surprising decision, the First District of the California Court of Appeal upheld approval of a 43-unit residential project following years of "not in my backyard" obstruction, government resistance and numerous court challenges.
  • Though it acknowledged that the California Environmental Quality Act (CEQA) was meant to serve noble purposes, the Court expressed frustration that the legislation had devolved into a "formidable tool of obstruction," particularly against projects that increase housing density.
  • The precedent is expected to benefit residential projects protected under state laws that impose limitations on a local agency's discretionary authority to deny or downsize such projects, such as the Housing Accountability Act and Density Bonus Law.

In its stunning opinion delivered on May 12 in Tiburon Open Space Committee v. County of Marin (May 12, 2022, A159860) __ Cal.Rptr.3d ___ (2022 WL 198892) (Tiburon Open Space Committee), the First District of the California Court of Appeal upheld Marin County's (the County) approval of a 43-unit residential project following decades of "not in my backyard" (NIMBY) obstruction, governmental recalcitrance and multiple court challenges. In so holding, the Court zealously denounced "official hostility" from "two levels of local government" and NIMBY litigation tactics aimed at preventing construction of much-needed housing in the midst of a statewide housing crisis.

Though the Court acknowledged that the California Environmental Quality Act (CEQA) "was meant to serve noble purposes," it expressed in stark terms its frustration that CEQA has devolved into a "formidable tool of obstruction, particularly against proposed projects that will increase housing density." Indeed, the Court's opinion directly quotes the scholarship of Holland & Knight Partner Jennifer Hernandez showing that new housing projects are the most frequent targets of CEQA lawsuits, as well as her observation that CEQA "is now the tool of choice for resisting change that would accommodate more people in existing communities." Noting that Ms. Hernandez's findings "are vindicated in this woeful record before us[,]" the Court bemoaned that "something is very wrong" with CEQA if it can so easily be "subverted into an instrument for the oppression and delay of social, economic, or recreational development and advancement."

The Court agreed with the project proponent's "essential point" that "the scope of environmental review must be commensurate with an agency's retained discretionary authority, including any limitations imposed by legal obligations." This precedent will benefit residential projects protected under state laws that impose limitations on a local agency's discretionary authority to deny or downsize such projects, such as the Housing Accountability Act (HAA) and the Density Bonus Law. Indeed, Tiburon Open Space Committee can be relied upon to limit the scope of CEQA review for projects with vested development rights under a valid development agreement or vesting subdivision map, as well as projects protected from the application of future laws and regulations by virtue of having filed a preliminary application pursuant to the Housing Crisis Act of 2019 (Senate Bill 330) or a complete application pursuant to the Subdivision Map Act.

Background

The facts of this case date back decades. Real party in interest Martha Co. (Martha) owns 100 hillside acres in the County overlooking the town of Tiburon (the Town) and San Francisco Bay. For more than 30 years, Martha has been attempting to develop the property into single-family residences. However, like many housing projects in affluent areas, local opposition from the Town and nearby neighbors was "intense and unrelenting." This NIMBY opposition led to a number of lawsuits dating back to 1974. Two federal court cases led to two judgments entered into pursuant to stipulated settlements (Stipulated Judgments). The first, in 1976 (1976 Judgment), required the County to authorize Martha to develop its property with no fewer than 43 single-family homes on minimum half-acre lots. In return, Martha was required to dedicate about 50 percent of its land to the County for open space and public trail uses. The language of the 1976 Judgment made clear that "development of the parcel with not less than a minimum of 43 single family residential units located on one-half acre minimum lots is consistent with the goals of the general plan." The County "expressly agreed that 43 units is the minimum number of units to be allowed on Martha Co. property."

After years of planning, in 2005, Martha submitted its application for a development consistent with the 1976 Judgment. After neighbors complained that the 1976 Judgment was void and violated their due process rights, the County filed a federal suit in 2005 asking that it be relieved from complying with the 1976 Judgment, naming the neighbors and the Town as defendants. The County and the defendant neighbors both argued that the 1976 Judgment was void and unenforceable since "environmental laws have changed in the 30 years since the 1976 Judgment" and that it was illegal for the County to have contracted away its authority to evaluate the proposed development without conducting a full review under CEQA. The district court dismissed the County's complaint and the neighbors' counterclaims and entered a second stipulated judgment (2007 Judgment). The 2007 Judgment stated that "the County acknowledges that it must process a subdivision map in conformance with the 1976 Judgment," that any development alternative or mitigation measure that would conflict with Martha's development rights under the 1976 Judgement are "legally infeasible," and that the County would prepare a "full scope Environmental Impact Report (EIR) for the project."

In December 2008, Martha filed its development application at issue in this action. In March 2011, the County prepared and circulated a Draft EIR for public review. In addition to addressing project impacts and mitigation measures, the Draft EIR examined four alternatives, including a 32-unit "Reduced Density Alternative." After a series of heated public hearings on the Draft EIR and then the Final EIR (which was also circulated for public review), on March 11, 2014, the Board of Supervisors declined to certify the Final EIR, claiming there were "too many unknowns" about project mitigation measures. The Board retained jurisdiction over the Final EIR until Martha submitted "a more specific proposal" to demonstrate feasibility of the proposed mitigation measures, "with input from additional agencies." Three years later, in June 2017, Martha submitted a "more specific proposal." After another round of heated hearings demonstrated "intense opposition" to the project, on Oct. 3, 2017, the Board voted 3-2 to certify the Final EIR and to conditionally approve Martha's modified 43-unit Master Plan. The Town and the neighbors (i.e., the Tiburon Open Space Committee) challenged the project approval in Marin County Superior Court, which denied their petitions. The Town and Tiburon Open Space Committee (collectively, the Appellants) then filed the appeal at issue here.

Court of Appeal Decision

On appeal, the Appellants argued that the Stipulated Judgments impermissibly compromised the County's exercise of its duties under CEQA, resulting in a truncated environmental review with a preordained outcome. Specifically, the Appellants claimed that the County impermissibly rejected the "environmentally superior," 32-unit Reduced Density Alternative because, in the Appellants' view, the County improperly determined that the Reduced Density Alternative was legally infeasible in light of the Stipulated Judgements' requirement that the County approve a 43-unit project. The Court rejected this claim outright, characterizing it as rhetorical "sound and fury."

According to the Court, the County permissibly acceded to the Stipulated Judgements, noting that agreements to settle property development disputes are common and favored by law. Moreover, the Court found that the County did not illegally contract away its discretion to fully comply with CEQA, noting that the Stipulated Judgements expressly contemplated preparation of an EIR for the project, and that the County certified an exhaustive EIR that had undergone multiple drafts and several rounds of public review. Most significantly, the Court expressly acknowledged that an agency's discretion under CEQA "is limited by its own legal obligations" and agreed with Martha's contention that "the scope of environmental review must be commensurate with an agency's retained discretionary authority, including any limitations imposed by legal obligations." The Court explained that, under CEQA, a lead agency's duty to avoid or mitigate a project's significant environmental effects "only exists to the extent feasible." Since the Stipulated Judgements obligated the County to approve a 43-unit project, the Court upheld the County's determination that the Reduced Density Alternative was legally infeasible, even though it was identified as the "environmentally superior" alternative in the EIR. Indeed, the Court found that CEQA did not require the EIR to analyze the Reduced Density Alternative at all, given the County's obligation to approve a 43-unit project.

The Court's holding is likely to be consequential with respect to the implementation of state laws that impose limitations on agency discretion over housing development projects. The HAA, for example, obligates local agencies to approve housing projects at their proposed density, provided they comply with applicable, objective general plan, zoning and subdivision standards and would not have a specific, adverse impact upon public health or safety. However, the HAA also provides that "[n]othing in this section shall be construed to relieve a local agency from complying with [CEQA]," which raises the question whether the Legislature intended to subordinate the HAA to CEQA. Tiburon Open Space Committee makes clear that the answer is "no." Instead, the opinion counsels that, when the HAA applies, environmental review must be tailored to account for the legal infeasibility of project alternatives and mitigation measures that conflict with the agency's legal obligation to approve projects at their proposed densities. In fact, the Court's holding expressly relied on its 1993 decision in Sequoyah Hills Homeowners Association v. City of Oakland, which upheld a lead agency's rejection of a reduced density alternative on the basis that it was legally infeasible because the project at issue was protected by the HAA. (1993) 23 Cal.App.4th 704, 715. Some legal scholars might go so far as to argue that, under Tiburon Open Space Committee, housing projects protected by the HAA "should require an EIR only if the city exercises discretion to shape the project in some way that generates a significant marginal impact, relative to what the HAA compels the city to approve."

Although Tiburon Open Space Committee does not relieve a local agency of its duty to comply with CEQA when considering a housing development project protected by the HHA or similar laws, it does permit the scope of environmental review to be narrowed so as to "reflect any applicable legal obligations that limit the agency's discretionary authority," a principle that the Court found was "expressly embedded in CEQA." The Court did, however, note its "cautionary observation" that "a local agency cannot simply intone the words 'legally infeasible' and expect that it will be the end of the matter." According to the Court, "the local agency that labels an alternative 'legally infeasible' should not be surprised if that conclusion is challenged in court." Thus, when relying on Tiburon Open Space Committee, a local agency would be wise to clearly document in the administrative record the reasons why applicable legal restrictions on the agency's discretionary authority necessarily limit the scope of its environmental review.

Tiburon Open Space Committee emphasized other established CEQA principles that are helpful to lead agencies and project proponents, briefly summarized as follows:

  • Standard of Review: The Court emphasized that the "judicial attitude to EIRs is deferential" and that courts "do not require technical perfection or scientific certainty." The court's inquiry "shall extend only to whether there was prejudicial abuse of discretion[,]" which is established only "if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence." Moreover, "[t]he substantial evidence standard is applied to conclusions, findings and determinations[,]" as well as "the scope of an EIR's analysis of a topic, the methodology used for studying an impact and the reliability or accuracy of the data upon which the EIR relied because these type of challengers involve factual questions."
  • Adequacy of EIR in General: The Court opined that "[t]oo much should not be expected of an EIR" and that an EIR "is not to have the exhaustive scope of a scientific textbook." Citing the CEQA Guidelines, the Court explained that a draft EIR should "normally be less than 150 pages and for proposals of unusual scope of complexity should normally be less than 300 pages." The Court was astonished that, here, the EIR was "almost 850 pages in length[,]" and pointed out that "[i]t is one of the ironies of CEQA in operation that the EIR, prepared and paid for by the developer of the proposed project, ends up being more comprehensive than absolutely required by CEQA." According to the Court, "the very completeness of a draft EIR may simply produce more targets for opponents of the project to attack."
  • Adequacy of Project Description: The Court rejected the Appellants' contention that the EIR's project description was unduly narrow, holding that the project description should avoid "excessive detail" and need only disclose "the nature of the project" and its "main features" taking into account "the project's technical, economic, and environmental characteristics." The Court found that the EIR's 32-page project description included "more detail than required" and that, "given the voluminous detail, an actual attack on the adequacy of the project description would almost certainly qualify as frivolous."
  • Mitigation: The Court devoted more than 50 pages of the 110-page opinion rejecting the Appellants' many allegations that the EIR's proposed mitigation measures were inadequate. In upholding the mitigation measures, the Court held that the EIR is "only required to have a reasonable plan for mitigation" and noted the following:
    • mitigation requiring implementation of best management practices (BMPs) qualify as "revisions in the project plans … agreed to by[] the applicant" under Section 21080(c)(2) of the CEQA Guidelines, and satisfy CEQA when imposed as a condition of project approval
    • mitigation requiring the applicant to prepare and implement resource protection plans in accordance with applicable regulatory standards in consultation with expert resource agencies does not constitute improperly deferred mitigation
    • where a mitigation measure requires a project applicant to develop mitigation plans in consultation with expert agencies, the lead agency is entitled to assume that such expert agencies will act in good faith and "know what is necessary for the protection of the community"
    • a mitigation measure need not expressly require the applicant to implement such measure where it is reasonable to expect compliance; according to the court, assuming noncompliance "ignores logic and defies common sense" because the lead agency would not issue required permits if the applicant does not comply with mitigation requirements, with the court adding that "This carrot-and-stick approach is established and accepted"
    • a lead agency may approve a project with a finding that a proposed mitigation measure is within the jurisdiction of another entity and should be adopted by such other agency
    • a lead agency is entitled to rely on the expert conclusions of its environmental consultants when evaluating the efficacy of mitigation measures, and it is up to the lead agency, not the courts, to determine if such expert conclusions are credible

Conclusion

The ultimate impact of Tiburon Open Space Committee remains to be seen, but it has the potential to cast a long shadow. As acknowledged by the Court, "CEQA lawsuit abuse is worsening California's housing crisis. … Something is very wrong with this picture." Hopefully, the Court's forceful affirmation that CEQA is subordinate to state laws limiting the discretionary authority of local agencies to deny or pare the density of compliant housing projects will reduce opportunities to leverage CEQA as an "instrument for the oppression and delay" that has "become its own reward for project opponents." After all, as this important case makes clear, "CEQA is not meant to cause paralysis."


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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