On July 7, 2023, following a request for publication made on behalf of the California Building Industry Association, the Building Industry Association of the Bay Area, and the California Business Properties Association, the Fourth District Court of Appeal ordered published its decision originally filed on June 8, 2023, affirming the trial court’s judgment upholding a Newport Beach multifamily project approval against various CEQA challenges. Olen Properties Corp. v. City of Newport Beach (2023) 93 Cal.App.5th 270.
(Note: Miller Starr Regalia attorneys Ken Stahl and Matt Henderson represented intervenors YIMBY Law and People for Housing Orange County (a chapter of YIMBY Action) in the Olen litigation.)
The Olen case concerns the addition of a 312-unit residential development to the Koll Center Business Park, an existing mixed use commercial development in the City of Newport Beach. Given that the City is fairly built out, there is a dearth of available sites on which to construct multifamily housing, and the City had identified the Center as a possible site for multifamily residential development circa 2006. That year the City prepared an environmental impact report for its general plan update (2006 EIR), which included residential development at the Center.
In 2020 the developer moved forward with the project, which included as CEQA compliance the preparation of an addendum to the 2006 EIR. The project was approved in early 2021 over the objections of one property owner at the Center. That owner then sued the City over the project, including allegations that the project did not comply with the City’s land use policies and that the addendum was improper under CEQA because it did not properly analyze traffic impacts, hazardous materials, geology and soils, and the effect of the Center’s covenants, conditions, and restrictions (CC&Rs). The trial court rejected these claims, the owner appealed, and the Court of Appeal affirmed.
The Court of Appeal’s Decision
The Court of Appeal’s opinion is refreshingly brief and to the point. With respect to CEQA, the court addressed four substantive subjects in analyzing the appellant’s overarching claim that the addendum was improper and a subsequent EIR was required. The first stage in the Court’s discussion was to frame the standard of review. The appellant argued that the “reverse substantial evidence” standard as set forth in Sierra Club v. County of Sonoma (1992) 6 Cal.App.4th 1307 applied, but the Court rejected that contention. The “reverse substantial evidence” test set forth in Sierra Club holds that where a program EIR was prepared, and a subsequent project is contemplated that falls outside of the scope of that EIR, and there is substantial evidence that the project will have significant environmental impacts, a new tiered EIR must be prepared: “[I]f there is substantial evidence in the record that the later project may arguably have a significant adverse effect on the environment which was not examined in the prior program EIR, doubts must be resolved in favor of environmental review and the agency must prepare a new tiered EIR, notwithstanding the existence of contrary evidence.” (Id. at p. 1319.) But in the Olen case, while the 2006 EIR analyzed impacts at the program level, the project at issue was contemplated in that EIR, and thus the ordinary substantial evidence test applied to the City’s decision not to prepare a subsequent EIR and instead to rely on an addendum.
After dealing with that threshold issue, the Court turned to the question of the traffic analysis in the addendum. This is the point in the case that will likely be of greatest potential interest to CEQA practitioners. The appellant argued that because CEQA Guidelines section 15064.3 now requires evaluating traffic impacts in terms of vehicle miles traveled (VMT), as opposed to the previously-used level of service (LOS) methodology as was used in the 2006 EIR, it was improper for the addendum to analyze the latter instead of the former.
The Court batted this argument aside with little difficulty based on the incompatibility of the two metrics, writing: “Plaintiff makes no attempt to explain how the City could compare LOS apples with VMT oranges to determine whether there have been substantial changes in the Project or the circumstances under which the Project was undertaken.” The Court also noted that section 15064.3 states that it is to be applied only prospectively, and cited the well-established rule that “new information” requiring a supplemental EIR cannot in fact be “new” if the issue in question was known at the time the original EIR was prepared. In the words of the Court:
And it is settled law in California that subsequent changes to the guidelines are not “new information” triggering section 21166, subdivision (c), so long as the underlying environmental issue was understood at the time of the initial EIR. (Concerned Dublin Citizens v. City of Dublin (2013) 214 Cal.App.4th 1301, 1318-1320.) Indeed, the rule could hardly be any different—if each change to guidelines constituted “new information,” section 21166 would require a new EIR nearly every time any change is made to a project, no matter how inconsequential.(Slip opn., pp. 12-13.)
Based on the applicable and deferential standard of review, the Court also rejected the appellant’s hazardous materials claim with little difficulty. Similarly, because the CC&Rs are private agreements they do not raise environmental issues required to be analyzed in an EIR. In the words of the Court: “The CC&Rs themselves, by contrast, are covenants between private parties conveying certain private property rights. Plaintiff identifies no authority, whether in the form of a statute, regulation, or published case, that requires consideration of CC&Rs in an EIR.” (Slip opn., p. 14.)
Finally, appellant’s claims with respect to geology and soils fared no better. It argued that technical recommendations in the soil report showed environmental impacts requiring mitigation. But, as the Court pointed out, those recommendations were for the benefit of the project, not the environment. The Court did not cite to the California Building Industry Association v. Bay Area Air Quality Management District (2015) 62 Cal.4th 369, the Supreme Court’s landmark “CEQA in reverse” decision (previously blogged on here), but that case’s holding is plainly contemplated in this portion of the decision. Moreover, while the recommended shoring could have ancillary benefits to adjoining properties, those measures are really for workplace safety and not to offset environmental impacts. The appellant’s argument that permanent on-site paleontological monitoring was required was also meritless and belied by the applicable general plan policy and conditions of approval for the project.
Thus, the Court affirmed the judgment in favor of the City and the project.
As noted above, Olen’s most significant holding is that an addendum may properly analyze traffic impacts under the old LOS methodology, and need not employ the newly mandated VMT methodology, when the previously certified EIR used the LOS methodology. This holding is consistent with the strong policy concerns favoring finality that underlie and animate CEQA’s subsequent review rules, which apply after a relevant EIR has been certified for a project, and is also consistent with CEQA’s well-established rule that regulatory charges do not constitute significant new information for purposes of the subsequent review analysis.
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.