The California Supreme Court has recently weighed in on two CEQA cases and likely will render two more decisions in the first quarter of 2010.  Here is what the Court has just decided, and here is what to expect.

Refusal To Renew A CUP Is Not Subject To CEQA

Sunset Sky Ranch Pilots Association v. County of Sacramento, ___ Cal.4th ___, Case No. S165861  (Dec. 28, 2009)

In this case, the Court held that declining to renew a conditional use permit for the operation of a privately owned airport is not subject to CEQA review.

The airport originally began operating in 1934.  Since 1999, it had been operating under a CUP with a five-year term.  In 2004, shortly before the CUP was about to expire, the airport owner applied to renew it.  The board of supervisors of Sacramento County declined to renew the CUP.  The board found that the airport use was no longer compatible with surrounding residential development.  The board also noted that the school district was finding it difficult to locate new school sites because the airport's overflight zone precluded school buildings.

The airport owner contended that the County violated CEQA because it did not evaluate the environmental impacts of closing the airport.  The Court disagreed.  The Court pointed out that a "project" under CEQA involves actions that a public agency undertakes, funds, or approves.  There also is a specific statutory exemption for projects that a public agency rejects or disapproves.  Here, since the denial to renew the airport's CUP was not an action undertaken, funded, or approved by the County, and since a statutory exemption applies to projects which a public agency rejects or disapproves, CEQA review was not required.  To hold otherwise would be unduly burdensome on both public agencies and applicants.  The Court stated that "[p]ublic agencies should not be forced to commit their resources to the costly and time-consuming environmental review process for proposed private development projects slated for rejection, whatever the reason for agency disapproval."  Moreover, "[i]f review were required whenever the status quo is altered by the denial of a CUP, unsuccessful applicants would not only have to cease operations, but also pay for environmental review of that undesired outcome."

The Court pointed out the result would have been different if the airport in question was a public airport, rather than a private one.  The closure of a public facility has been deemed a "project" under CEQA because it involves action directly undertaken by the public agency.

This case involves the straightforward application of a statutory exemption for disapproved projects.  As such, the decision suggests the current Supreme Court will afford the legislature a certain measure of deference, and in applying statutory exemptions, the Court will be reluctant to second guess the legislature's intent. 

California Supreme Court Rules The Contents Of Notice Of Determination Govern CEQA's Statute Of Limitations

Committee for Green Foothills v. Santa Clara Board of Supervisors, ___ Cal.4th ___, Case No. S163680 (Feb. 11, 2010)

Do the alleged violations of the California Environmental Quality Act or the contents of a properly filed notice of determination ("NOD") control the deadline for filing a lawsuit under CEQA?  The California Supreme Court has decided that the contents of the NOD control the deadline and that where a local agency files an NOD, a CEQA lawsuit must be filed within 30 days of the filing.

Committee for Green Foothills involved an NOD filed by Santa Clara County that reported the County's certification of a supplemental EIR for the improvement of certain proposed trails.  The NOD also reported the County's approval of an agreement for the alignment of certain other proposed trails and future review of the improvement plans for those trails by San Mateo County and two neighboring towns, but the County did not analyze the agreement or the trails under CEQA.  The Committee filed its CEQA lawsuit 171 days after the filing of the NOD.  The Supreme Court held that the Committee filed its lawsuit too late and that the Committee should have filed its lawsuit within 30 days of the NOD's filing.

The Committee argued that CEQA's 180-day statute of limitations should apply because the local agency approved a project without having determined whether the project may have a significant effect on the environment, and the County approved the alignment of proposed trails without complying with CEQA.  The Supreme Court disagreed, saying that "the filing of a notice of determination [is] of paramount importance for determining which statute of limitations applies to a CEQA claim.  If a valid NOD has been filed, any challenge to the decision under CEQA must be brought within 30 days, regardless of the nature of the alleged violation."

If there was any doubt before, the Supreme Court's decision underscores the importance of a public agency's filing of a notice of determination, no matter how certain the agency may be that CEQA does not apply to its decision, in order to trigger CEQA's 30-day statute of limitations.

Upcoming Decisions

On the Court's docket is another statute of limitations case and an environmental baseline case.  Here is a preview of those two cases. 

Stockton Citizens for Sensible Planning et al. v. City of Stockton, __ Cal.4th __ (2010), Case No. S159690.

In the first case, Stockton Citizens, the Court recently heard oral argument in the appeal from the Third District Court of Appeal's decision.  The Supreme Court described the issue as follows: Was plaintiffs' challenge to the approval of a Wal-Mart Supercenter project filed within the applicable statute of limitations on the theory that the approval was invalid and thus did not trigger the running of the limitations period?

The case involved an approval of a modification to a master development plan ("MDP"), which proposed a Wal-Mart Supercenter that would exceed the allowed retail square footage by about 400 percent and would prevent the construction of 925 multi-family residential units.  The City's Community Development Department Director ("Director") sent the applicant a letter approving the modification as substantially conforming to the MDP.  The Director did not hold a public hearing or conduct a CEQA analysis.  The City filed a notice of determination indicating the approval was exempt from CEQA and a legal challenge followed.  The Court of Appeal in a 2-1 vote held that the CEQA complaint was timely filed and was not barred by CEQA's 35-day statute of limitations applicable to notices of exemption.

Under CEQA, the deadline to file a CEQA lawsuit challenging a notice of exemption is 35 days after the notice is filed.  The Court of Appeal's majority found that the 35-day statute of limitations did not apply because the Director's approval did not constitute an approval by the City and, without a City approval, the statute of limitations did not begin to run.

In reaching its decision, the majority opinion analyzed the MDP to determine whether the City had given the Director the authority to approve the proposed modification.  It concluded that the Director did not have the requisite authority.  As a result, the Director's approval of the MDP modification was invalid and did not constitute an approval by the City that triggered CEQA's statutes of limitations.  The City's filing of the notice of exemption did not matter because it did not give notice of a valid City approval.

A spirited dissenting opinion characterized the majority's decision as turning the statute of limitations on its head.  Whether a CEQA statute of limitations applies to bar a claim typically turns on two dates:  (i) the date a local action files a notice of determination announcing its action under CEQA, and (ii) the date the CEQA complaint was filed.  Courts do not consider the merits of the underlying claims in deciding whether the complaint was filed on time.  Here, however, the Court of Appeal essentially determined the merits of the claim, namely that the Director had improperly approved the MDP modification, and then decided the invalid approval meant the statute of limitations did not begin run, notwithstanding the notice of exemption the City filed announcing its action.

Our prediction on the outcome of this case: The Court will reverse the Court of Appeal.  As discussed above, the Court just held in Committee for Green Foothills, that the contents of a validly filed notice of determination, rather than the alleged violations of CEQA, control which statute of limitations applies to a CEQA claim. Assuming the Court finds that the City of Stockton filed a valid notice of exemption, the Court will likely say the Court of Appeal should have limited its analysis to the dates the notice of exemption and the complaint were filed, and it erred in looking through the notice of exemption to the underlying CEQA claims.

Communities for a Better Environment et al. v. South Coast Air Quality Management Dist. et al., ___ Cal.4th ___ (2010), Case No. S161190.

In Communities for a Better Environment, the issue to be decided is this: In determining whether a project requires the preparation of an environmental impact report under CEQA, is the maximum amount of emissions allowed a facility under an existing permit part of the baseline against which future environmental impacts should be assessed, even though (a) the facility's current operations did not reach that level of emissions and (b) the level of emissions allowed by the permit had not been subjected to CEQA review?  The Court of Appeal held that the lead agency — SCAQMD — improperly relied on a baseline level of permitted emissions which did not reflect existing physical conditions.

In our opinion, the lower court got this one right.  In reaching its decision, the Court of Appeal had to reconcile two lines of authority on what constitutes the proper project baseline against which significant environmental effects can be determined.  One line of cases stands for the principle that the project baseline is the environmental condition existing on the property before the project.  The other line of cases appears to hold that permitted conditions constitute the appropriate baseline.  We suspect the Supreme Court will affirm this decision and resolve the divergent lower court cases in favor of the former line of decisions.