In an opinion filed September 6, and later ordered published on October 7, 2019, the First District Court of Appeal (Div. 4) affirmed the trial court’s judgment denying plaintiff groups’ writ petition challenging Sonoma County’s use permit and related mitigated negative declaration (MND) for a winery project in the County’s rural Knights Valley area.  Maacama Watershed Alliance, et al v. County of Sonoma, et al. (James Bailey, Knights Bridge Vineyards, LLC, Real Parties in Interest) (2019) _____ Cal.App.5th _____.

The Project, County’s Administrative Proceedings, and the Trial Court Litigation

The project includes a 5,500 square foot winery building, adjoining 17,500 square foot wine cave, wastewater treatment and water storage facilities, and fire protection facilities on a 2.4-acre portion of an 86-acre parcel zoned Land Extensive Agriculture, a designation which allows wineries and tasting rooms if a conditional use permit is obtained.  Existing baseline conditions include two residences and 46 acres of vineyards on the project site, with nearby areas primarily made up of vineyards; the only permitted Knights Valley winery is located 1.4 miles away.  A creek somewhere in the vicinity (Bidwell Creek) apparently contains or may contain salmonids, including steelhead that are federally listed as a threatened species and coho salmon.

County’s MND for the project evolved over time, and the project was significantly modified in response to early environmental comments and concerns expressed by plaintiffs during County’s administrative approval proceedings (e.g., to reduce water demand, not increase net on-site groundwater use, develop a plan for cave spoils); thus, while County’s Board of Zoning Adjustments initially approved the use permit with a 2015 MND, a revised 2016 MND was prepared after plaintiffs appealed to the Board of Supervisors, and – after further comments and review that focused on groundwater/water quality impacts – a second revised (and final) 2017 MND was prepared and adopted when the Board ultimately approved the project subject to conditions.

Still unsatisfied, plaintiffs sued, lost, and appealed.

The Court of Appeal’s Decision – Standard of Review

Applying CEQA’s “fair argument” standard, the Court of Appeal affirmed the judgment denying plaintiffs’ writ petition and upheld the County’s 2017 MND and project approval.  The Court held that it could not be “fairly argued on the basis of substantial evidence” in the record before it that the winery project, as mitigated, “may have a significant environmental impact.”  The Court acknowledged that “may” means a “reasonable possibility,” and that the fair argument standard under Public Resources Code § 21151 “creates a low threshold requirement for initial preparation of an EIR and reflects a preference for resolving doubts in favor of environmental review when the question is whether any such review is warranted.”  (Last quoting Jensen v. City of Santa Rosa (2018) 23 Cal.App.5th 877, 884, my post on which can be found here.)  However, “[i]f the project may have significant effects, but mitigation measures will make the effects insignificant, the agency may adopt a mitigated negative declaration.”  (Citing Pub. Resources Code, § 21080(c)(2).)  Further, the lead agency is given “the benefit of the doubt on any legitimate, disputed issues of credibility” (quoting Pocket Protectors v. City of Sacramento (2004) 124 Cal.App.4th 903, 928, internal quotes omitted), and “[t]he petitioner bears the burden of proof to demonstrate by citation to the record the existence of substantial evidence supporting a fair argument of significant environmental impact.”  (Quoting Jensen, at 886.)  And “mere argument, speculation, and unsubstantiated opinion, is not substantial evidence for a fair argument[,]” nor does the existence of “public controversy” alone or “the mere possibility of adverse impact on a few people, as opposed to the environment in general” compel preparation of an EIR.  (Quoting Jensen, at 928-929, citations omitted.)  In summing up the applicable rules governing the fair argument standard of review, the Court reiterated that the standard “is not whether any argument can be made that the project might have a significant environmental impact, but rather whether such an argument can fairly be made.”  (Quoting Friends of “B” Street v. City of Hayward (1980) 106 Cal.App.3d 988, 1003.)

Insufficiency of Plaintiffs’ Expert Opinions on Geology and Erosion Impacts to Support Fair Argument

The Court proceeded to apply the foregoing principles to reject plaintiffs’ attempts to make the requisite “fair argument” as to any area of potential environmental impact.  Regarding potential geological (i.e., landslide) and soil erosion impacts that might affect slope stability, debris flows, and pollutant loads into Bidwell Creek, the Court noted County’s conclusions were supported by a geotechnical investigation report that had been peer reviewed twice.  This resulted in consensus among those experts that site geologic conditions had been adequately characterized and mitigated as needed, that the project was feasible from a geotechnical standpoint, and that slope stability concerns were adequately mitigated.  An expert biological assessment concluded that special status species on or offsite would not be affected if best management practices (BMPs), such as silt and erosion control measures, were implemented during and after construction.

Plaintiffs’ geological and engineering experts wrote letters critiquing the reports and conclusions of County’s experts, claiming they were unsupported by and lacked data, and complaining about lack of a plan for cave spoils placement; in response, County’s expert engineers submitted a stormwater management plan and fill placement drawings.  Further expert peer review concluded these plans would, through implementation of BMPs and placement of the approximately 21,000 cubic yards of cave spoils in vineyard areas with gentle slopes not exceeding 2%, and located at least 100 feet (twice county grading plan standards) from Bidwell Creek, among other erosion control measures, “prevent significant erosion of cave spoils that could degrade water quality in Bidwell Creek.”

Ultimately, the Court of Appeal (like the trial court) was “unpersuaded” that plaintiffs’ experts’ “criticism of the data, findings, and conclusions of the county’s consultants is sufficient to support a fair argument that digging the caves will adversely affect slope stability.”  While plaintiffs’ experts criticized County’s expert reports as inadequate, they did “not provide evidence that the project is reasonably likely to cause landslides or otherwise generate harmful releases of debris” and thus constituted “speculation and unsubstantiated expert opinion [that were] not substantial evidence for [a] fair argument.”  (Citing Pocket Protectors, at 928-929.)

The Court similarly rejected plaintiffs’ erosion impact arguments, stating:  “Nothing in the record indicates there is a fair argument that placement of the spoils on a two percent grade, at least 100 feet from the creek, covered with straw mulch, and isolated by erosion control measures, will significantly affect water quality in the creek.  Nor is there evidence that compliance with the County’s grading ordinance, its adopted best management practices, and the erosion control measures specified by [its engineers] for use before and after construction will be insufficient to achieve that goal.”  Further, relying on the BMPs and standards of County’s grading ordinance to mitigate unknown future effects to some extent did not constitute improperly defined mitigation.  Deferral of specifics of mitigation is proper “where the local agency commits itself to mitigation and lists the alternatives to be considered, analyzed and possibly incorporated into the mitigation plan” (quoting Defend the Bay v. City of Irvine (2004) 119 Cal.App.4th 1261, 1275) and that standard was met.  Per the Court:  “We see nothing improper in adopting measures that reduce the project’s expected environmental effects to a level of insignificance, but require monitoring and adjustments in the event of unanticipated conditions.”

Insufficiency of Plaintiffs’ Expert Opinions on Groundwater Impacts to Support Fair Argument

The Court likewise rejected plaintiffs’ arguments that the project’s groundwater use would significantly affect salmonids, groundwater supply or fire suppression as being unsupported by substantial evidence.  The project, as modified prior to approval, would result in no net increase in groundwater use over current conditions, and County imposed numerous conditions of approval to ensure this standard was met.  There was disagreement among experts about whether the project would even draw water from any area that was hydrologically connected to the groundwater basin that fed Bidwell Creek or neighboring wells.  But in any event, and even assuming such an undemonstrated connection, the project would use only two to three percent of the estimated annual recharge at the property; it would reduce water flowing out from the underlying Sonoma Volcanics aquifer by 1.5 percent (and only a small portion of that water would move into the creek); and any effects on the creek would be “imperceptible.”  In concluding that County properly found there was no substantial evidence supporting a fair argument the project will have significant effects on groundwater supplying Bidwell Creek or neighboring wells, the Court observed: “The project’s water demand will be less than that of a residence, and a small fraction of mean annual groundwater recharge.  The record indicates the aquifer underlying the project and that underlying Bidwell Creek are not in contact, but even assuming there is a geologic connection, there is no evidence the project would have any perceptible impact on the water flowing from one aquifer to the other, and thence to the creek.”  Additionally, County’s conditions of approval that required the project to entirely offset its water use so as to result in no net increase were enforceable, not illusory, and they further supported County’s conclusion that the record lacked substantial evidence supporting a fair argument of significant groundwater supply impacts.

Insufficiency of Plaintiffs’ Evidence to Support a Fair Argument of Significant Visual Impacts

Given that the project site is not designated as a scenic resource, and that the new winery will be centrally located in the 86-acre parcel and not visible from public roads (with the possible exception that its “upper level… might be visible from some areas on Franz Valley Road or Highway 128, depending on the vegetation”), the Court had little trouble upholding County’s finding that the record lacked substantial evidence that the project would cause any significant aesthetic impact.  The winery, which would be set into the hillside (rather than on the ridgetop) with a backdrop of trees, “would be required [by conditions of approval] to have a dark-colored exterior, a non-reflective rooftop, and landscaping” among other conditions addressing aesthetics.  Appellants’ evidence that an existing residence on a ridgetop on the property was “unsightly” and visible from Highway 128 did not suffice as “substantial evidence that the [proposed] winery building, in an area zoned for wineries and tasting rooms, will create a significant aesthetic impact.”

Nor did County improperly fail to assess the project’s visual impacts and substitute future design review for CEQA analysis in reaching its conclusion:  “The conditions of approval themselves require vegetation and a dark, non-reflective exterior, rather than merely relying on a later determination of these matters.  They do not improperly defer mitigation, since they set standards to guide the County in reviewing the project’s design.  (See Endangered Habitats League, Inc. v. County of Orange (2005) 131 Cal.App.4th 777, 794.)”

Insufficiency of Plaintiffs’ Evidence to Support a Fair Argument of Increased Wildfire Risks

Finally, the Court rejected appellants’ argument that an EIR is necessary to examine the project’s fire hazards.  The project’s fire safety and water protection features are consistent with the County General Plan’s Public Safety Element and plaintiffs pointed to no substantial evidence supporting a fair argument of a reasonable possibility that the project, as conditioned, would significantly increase wildfire risk.  Per the Court:  “The project is subject to the County’s permit requirements, and it includes fire suppression measures, such as sprinklers in the winery and wine caves and an emergency water supply in compliance with County standards, as well as adequate emergency access for firefighters.  There is no indication that the activities at the winery will cause an elevated risk of fire.  Knights Bridge will be required to maintain vegetative fuels in compliance with fire regulations.  And to the extent appellants are arguing that fire protection services are already stretched thin, “[t]he need for additional fire protection services is not an environmental impact that CEQA requires a project proponent to mitigate.””  (Quoting City of Hayward v. Trustees of California State University (2015) 242 Cal.App.4th 833, 843, my post on which can be found here.)

In a noteworthy evidentiary ruling in this administrative mandamus litigation, the Court denied plaintiffs’ request for judicial notice of a June 11, 2018 Board of Supervisors agenda item discussing the October 2017 Tubbs and Nuns wildfires.  The Court explained:  “The agenda was not part of the administrative record, and it was created – and considered events that occurred – after  the County approved the project.  (See Jefferson Street Ventures, LLC v. City of Indio (2015) 236 Cal.App.4th 1175, 1192 [denying request for judicial notice of report that was not part of administrative record]; Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 578-579 [extra-record evidence that could not have been produced at administrative level in exercise of reasonable diligence admissible in traditional mandamus proceedings only if it existed before agency made decision]; [CEQA] Guidelines, § 15162(c) [“Information appearing after an approval does not require reopening of that approval”].)”

Conclusion and Implications

While negative declarations and MNDs are often vulnerable to litigation challenges when experts have weighed in against them, the First District’s decision here demonstrates that is not invariably the case.  While the “fair argument” standard indeed sets a low threshold for preparation of an EIR that is often easily satisfied by an expert’s opinion, this case presents a counter-example showing when an MND will be held sufficient under CEQA.  To constitute substantial evidence supporting a fair argument, expert opinion must not be speculative or unsubstantiated.  Further, it must be directed at the relevant issues and be grounded in fact.  Expert opinions that merely critique, or point out immaterial errors in, other technical expert studies – without actually providing or pointing to substantial evidence in the record that significant environmental impacts are reasonably likely to occur as a result of the project – will not suffice to meet the fair argument test.

Further, as the Court here explained, an MND can evolve and be strengthened through revisions made during the lead agency’s administrative proceedings in response to criticisms of project opponents:  “[W]e note that a persistent explanation for this outcome [i.e., denying plaintiffs judicial relief] is the success appellants already achieved in getting modifications to the project and the analysis of its environmental effects.  In response to early concerns raised by appellants and others, [real party] Knights Bridge and its consultants made important concessions, for instance by reducing the project’s water demand, agreeing not to increase net groundwater use on the project site, and developing a plan for the cave spoils.  The record lacks substantial evidence to support a fair argument that, as now mitigated, the project is reasonably likely to cause significant environmental effects.”

Thus, this case’s lesson for lead agencies and project proponents attempting to fully mitigate adverse project impacts, while avoiding the burdens of an unnecessary EIR, is:  “If at first you don’t succeed, try, try again.”  And its lesson to project opponents whose initially justified environmental concerns devolve into “kill the project no matter what” efforts is:  “Quit while you’re ahead.”

 

Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for more than fifty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com.