In a published opinion filed October 26, 2022, the Second District Court of Appeal (Div. 6) appears to have significantly expanded the reach of both the Brown Act and the procedural requirements of CEQA in holding, on an issue of first impression, that a public agency must list its staff’s determination that a project is exempt from CEQA as an item of business on the agenda for the meeting at which it considers the project approval. G.I. Industries v. City of Thousand Oaks, et al (Arakelian Enterprises, Inc., Real Party In Interest) (2022) __ Cal.App.5th __. The opinion thus extends San Joaquin Raptor Rescue Center v. County of Merced (2013) 216 Cal.App.4th 1167 (“San Joaquin Raptor”), which held that a public agency’s decision to adopt a CEQA document, such as an EIR or negative declaration, must be described as a distinct item of business under the Brown Act when it is to be considered at a public hearing, to the distinct context of CEQA-exempt projects.
Factual And Procedural Background and the Trial Court’s Decision
The case arose out of business competition. Appellant G.I. Industries (dba Waste Management, or “WM”) sued City over the adequacy of the agenda item description under which the City Council considered and ultimately awarded a 15-year franchise agreement for solid waste disposal services to WM’s competitor, Athens, which was named as a real party. The agenda failed to mention the City staff’s determination that the project was categorically exempt under exemptions for “existing facilities” (CEQA Guidelines, § 15301), and “actions by regulatory agencies for the protection of the environment” (§ 15308), and the “common sense” exemption, (§ 15061(b)(3)), or that the City Council would consider a CEQA exemption at the hearing.
WM sent a comment letter raising concern that the City hadn’t considered potentially adverse environmental impacts of the proposed new franchise agreement. In response, on the afternoon of the hearing, the City posted a supplemental item giving notice of staff’s recommendation that the Council find the project exempt, along with a supplemental information package explaining the bases for staff’s recommendation. (Obviously, assuming that such information was required to be in the agenda in the first place, the City’s failure to include it in the agenda posted at least 72 hours in advance of the meeting was a violation of the Brown Act.)
Despite environmental issues being raised at the public hearing, such as potential alternative vehicle and hauling yard sites and hauling routes whose potential impacts had not been analyzed, the Council adopted a motion to both approve the project and find it CEQA-exempt, which the meeting minutes reflected as separate actions. The City thereafter filed a notice of exemption (NOE).
WM thereafter sent the statutorily required “cure and correct” letter stating that the City violated the Brown Act by voting to adopt an NOE without adequate notice in the posted agenda issued at least 72 hours prior to the meting; the City failed to respond within 30 days, which the Brown Act deems a decision not to cure or correct that clears the way for a lawsuit. (See Gov. Code, §§ 54960.1(1), 54954.2(1)(1).) WM sued.
While agreeing with WM that the CEQA exemption was a separate item of business from the franchise agreement, the trial court still sustained the City’s and Athens’ demurrer. It found that because CEQA doesn’t require a public hearing for an exemption determination, the Brown Act agenda notice requirement didn’t apply.
The Court of Appeal’s Decision
The Court of Appeal disagreed and reversed. After reciting some Brown Act and CEQA background fundamentals, it held that the petition adequately stated a cause of action. Per the Court: “By its terms the Brown Act applies to the City’s determination that the Athens project is exempt from CEQA. That determination was an item of business transacted at a regular meeting of a local legislative body.” (Citing Gov. Code, § 54954.2(a).) The Court cited San Joaquin Raptor, which involved a county planning commission agenda that listed action on a subdivision approval, but not adoption of an accompanying MND under CEQA, preceding the Commission’s project approval hearing at which it took action approving both items by separate motions. That Court held the agenda violated the Brown Act because the adoption of the MND was a distinct item of business, and not a mere component of project approval, since it (1) involved a separate action or determination of the Commission and (2) concerned discrete, significant CEQA compliance and environmental impact issues. Accordingly, San Joaquin Raptor held the Commission’s discussion and adoption of the MND at its meeting violated the Brown Act because it was not listed on the meeting agenda.
Extending San Joaquin Raptor’s holding and reasoning to the case before it, the Second District held: “The CEQA exemption involved a separate action or determination by the City and concerned discrete significant issues of CEQA compliance.” The Court rejected the City’s attempt to distinguish San Joaquin Raptor as involving an MND, rather than an NOE, reasoning as follows:
“It is true an MND involves an assessment of the environmental impacts of a project, whereas an exemption is a determination that CEQA does not apply. But for the purposes of the Brown Act, it is a distinction without a difference.
Members of the public are just as entitled to have notice of and an opportunity to participate in a local agency’s determination that a CEQA exemption applies as they are to the agency’s determination that an MND should be issued.
[¶] We are required by the California Constitution to broadly construe the Brown Act to further the People’s right to access the conduct of the People’s business. [citation] We would be remiss in that duty if we narrowly interpreted the Brown Act to apply to a determination that an MND is appropriate but not a determination that a project is exempt from CEQA, [as] both are aspects of the People’s business.”
The Court of Appeal hand-waved away a line of cases cited by the City “that hold CEQA does not require a public hearing for a determination that a project is exempt[.]” reasoning that “[t]he cases discuss only CEQA” and “do not discuss whether the Brown Act applies” and that “[a] case is not authority for issues it does not consider.” It then somewhat cryptically explained: “[T]he Brown Act as applied to a CEQA exemption does not require a formal public hearing where the findings must be supported by substantial evidence. All the Brown Act requires is that the exemption be placed on the meeting agenda and an opportunity for the public to comment.” In other words, as best I can interpret this reasoning, an action – i.e., a lead agency’s determination that a project is CEQA-exempt – for which neither the Brown Act nor CEQA requires a public hearing must nonetheless be placed on the agency’s meeting agenda for public comment.
The Court bolstered its position by amorphous reasoning that CEQA has no language precluding the Brown Act’s application, and by referencing the public’s “privileged position” under CEQA, which it concluded were “entirely consistent” with applying the Brown Act to the “CEQA process.” Attempting to draw support from San Joaquin Raptor, it stated that an exemption finding “is not a minor matter” since it forecloses any environmental impact analysis and “is at least as important to environmental protection as an MND.” Rejecting the City’s undue burden arguments, and apparently attempting to cabin somewhat the scope of its holding, the Court noted that (1) the Brown Act section at issue “applies only to an item of business transacted or discussed at a regular meeting of [a local agency’s] legislative body” (citing Gov. Code, § 54954.2(a)(1)), (2) most day-to-day business is not transacted at such meetings, and (3) “if a local legislative body intends to vote on or discuss a CEQA exemption at a regular meeting, it will require minimal effort to include it as an agenda item.”
Perhaps in another attempt to narrow its holding by hewing more to the facts of the case, the Court found significant the procedural context before it – i.e., review of a judgment of dismissal entered after the sustaining of a demurrer without leave – and an Appellant’s “petition alleging that approval of the CEQA exemption was expressly made by motion and voted on at the meeting,” observing that it was bound to assume the truth of such factual allegations.
But the Court went much further than the case’s facts with its broad pronouncements that “while the “City can delegate its duty to its staff to determine whether a CEQA exemption applies” (citing Guidelines, §§ 15025(a)(1), 15356), “the delegation only goes so far.” Per the Court:
“The legislative body of the local agency retains the inherent power to overrule its staff’s determination. Thus, the local agency makes the ultimate decision whether a CEQA exemption applies. [¶] The City cannot avoid the Brown Act simply by delegating its duty to its staff. Where a local agency at a regular meeting approves a project that is subject to a staff’s determination of a CEQA exemption, it must give notice of the CEQA exemption on its agenda….”
The Court concluded its opinion by liberally construing and upholding WM’s “cure and correct” letter. It held the letter was legally adequate under the Brown Act, despite City’s “nitpicking” of technical errors in its language – i.e., its erroneous reference to City’s “adoption” of an NOE. The Court stated that should WM prove its case it would be entitled to have the CEQA exemption determination voided under the Brown Act, but declined to comment further on any potentially appropriate remedies, leaving those issues to the trial court on remand. Unmentioned was the Brown Act’s requirement of a showing of prejudice to obtain a set-aside remedy.
Conclusion and Implications
It is unclear whether this case’s Brown Act holding will be limited by the seemingly material facts that the City Council actually discussed and took formal action on the CEQA exemption determination at a regular public meeting, after not having properly agendized such action. The Court’s statements go beyond those facts, however, in indicating that a lead agency’s legislative or other decision-making body must always agendize a staff’s CEQA exemption determination when it considers a (presumptively-exempt) project, since it has “inherent power to overrule” and thus “makes the ultimate decision” on the exemption determination. This seems to be either dictum or new judge-made law that is not solidly supported by the opinion’s reasoning or citation to relevant legal authority. In my view, if the Second District meant to make new law in a published opinion addressing an issue of first impression – which I’m inclined to think it did – it should at least have grappled with the line of CEQA cases cited by the City, which it instead dismissed out of hand.
Since the Court didn’t really give those CEQA cases fair consideration in its opinion, I’ll briefly try to here; that line of cases had led the leading CEQA treatise to conclude: “CEQA does not require public agencies to follow any specific procedure in approving activities that are exempt. An agency is not required to provide any notice to the public or other agencies that it is considering whether an activity it is going to carry out or approve is exempt. The agency need not provide an opportunity to review or comment on the exemption, and it need not hold a hearing on its exemption determination. [citations] An agency is not required to prepare an initial study or other form of written determination to show that a project is exempt. [citations] Because an agency is not required to make a written determination, a project’s approval cannot be challenged on the ground that the agency’s exemption determination was documented after the project was approved. [citation]” (1 Kostka & Zischke, Practice Under the California Environmental Quality Act (CEB 2d ed., 3/22 Update), § 5.114, pp. 5-102 – 5-103, and cases cited.) Further, “[f]indings documenting the basis for an exemption determination are not required by statute or the CEQA Guidelines.” (Id., § 5.115, p. 5-104.) “[S]everal courts have held that findings were not required, because no hearing was required by law for the agency’s determination that a proposed activity was exempt.” (Id., citing CalBeach Advocates v. City of Solano Beach (2002) 103 Cal.App.4th 529; Association for Protection of Envt’l Values v. City of Ukiah (1991) 2 Cal.App.4th 720, 729; Dehne v. County of Santa Clara (1981) 115 Cal.App.3d 827, 835 [-836].) In light of these extensive authorities holding that no public hearing is required by CEQA on an exemption determination, the City’s position that it was not required to agendize its staff’s determination for a public hearing becomes more understandable.
Perhaps the City here strategically erred in taking WM’s “bait” by belatedly agendizing and then discussing and taking express action on its staff’s CEQA exemption determination at the project approval hearing; it may have been better off from a legal perspective simply ignoring those issues and proceeding with the public hearing while listening to all public comment and tacitly treating the exemption determination as a fait accompli. The material facts would have then been different and it could not then accurately have been accused of “discussing” and “taking action on” a non-agendized “item of business” at a public meeting.
I don’t know whether the Court’s interpretation of the Brown Act is good public policy or whether it will turn out to unduly burden public agencies considering CEQA-exempt projects. What is clear, though, is that the Second District may have broadly imposed on all public agencies a new procedural obligation to agendize all CEQA exemption determinations for a hearing – despite the fact that CEQA itself requires no hearing, and no formal findings or determination at all for exempt projects. The Second District grounded this new obligation in its interpretation of the California Constitution and the Brown Act. Lead agencies should take heed and proceed cautiously in dealing with CEQA-exempt projects going forward, lest they inadvertently provide additional grounds for setting project approvals aside under the Brown Act.
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