On November 22, 2024, the First District Court of Appeal’s (Div. 4) partially-published opinion in People of the State of California ex rel. Bonta v. County of Lake (Lotusland Investment Holdings, Inc., et al. Real Parties in Interest) (2024) 105 Cal.App.5th 1222 (No. A165677) became final.  The published part of the decision addresses several significant CEQA topic areas, including the adequacy of an EIR’s discussions of impacts related to a large rural resort development project’s wildfire risks and water supply impacts, and the propriety of a lead agency’s condition of approval imposing a carbon credit purchase obligation to potentially mitigate the project’s significant and unavoidable greenhouse gas (GHG) emissions in light of acknowledged uncertainty as to whether such credits would be available.  (As a matter of disclosure, Respondent County of Lake was represented in the trial and appellate proceedings in this case by this post’s authors, Miller Starr Regalia attorneys Arthur Coon and Matthew Henderson.)

Factual and Procedural Background

The project at issue is proposed for development on an approximately 16,000-acre site known as the Guenoc Valley Ranch, and would create a new “wildlands-urban interface” in unincorporated Lake County.  The largely undeveloped rural site currently consists mostly of grasslands, and chaparral and woodland vegetation, includes a number of lakes and reservoirs, and is primarily used for grazing, vineyards, recreational uses and open space.  The mixed-use project includes a luxury resort/residential complex with various housing types, along with recreational facilities, a hotel, off-site worker housing, and necessary infrastructure.  In light of the history of wildfires in and around the County, including on portions of the project site, the project was designed with wildfire prevention and protection in mind, and includes features such as underground powerlines, rotational grazing and other fuel management activities, substantial fire breaks along project roadways, a mandatory Wildfire Prevention Plan, and many other project components disclosed in the EIR, record and briefing, but not mentioned in the Court’s Opinion, including a new onsite fire station and emergency response center, heli-pads, early fire detection and warning system, use of vineyards and a golf course as fire breaks, mandatory defensible space requirements around residential dwelling structures, etc.

The County published a Draft EIR (DEIR) for the Project in February 2020.  The Center for Biological Diversity (CBD), the California Native Plant Society (CNPS), and the Attorney General (AG) all submitted comments on the DEIR.  The County published its responses to comments along with the Final EIR (FEIR) in June of 2020.  CBD, CNPS, and the AG made further comments on the FEIR, and the County further responded to those relating to wildfire risk by publishing (but not circulating) an “errata” to the FEIR addressing the wildfire concerns.  The applicant’s counsel also submitted a letter addressing those risks and asserting that they had been alleviated by the project’s design features. 

The County certified the FEIR and approved the project on July 21, 2020.  CBD and CNPS each filed CEQA petitions challenging the EIR and the project. The AG later successfully moved to intervene in the CBD proceeding, and then the two lawsuits were consolidated.  All three petitioners challenged the adequacy of the FEIR on numerous grounds, including but not limited to alleged failures to adequately analyze wildfire-related impacts, greenhouse gas (GHG) emissions, and water usage impacts, among many others.

The trial court granted the petitions on the sole ground that the FEIR lacked substantial evidence support for its conclusion that there would be less-than significant project impacts on community emergency evacuation routes in the event of wildfire; it therefore entered judgment directing the issuance of a writ vacating the FEIR certification and project approvals on that ground, but rejected all other arguments made by CBD, CNPS, and the AG, and denied their petitions in all other respects.  All three petitioners appealed from the judgment on all the issues on which they lost (although the AG later settled and dismissed its appeal); having prevailed on all but one issue, the County and Real Party did not appeal.

The Court of Appeal’s Opinion

Inadequacy of FEIR’s Analysis of Project’s Wildfire-Related Impacts

The primary issue addressed in the Court of Appeal’s partially published opinion was the adequacy of the FEIR’s analysis of wildfire related impacts, and specifically its disclosure of the project’s alleged impact of exacerbating wildfire ignition risks over existing conditions by introducing approximately 4,000 new project workers, residents and guests into the largely undeveloped rural area.  The Court was troubled by the use of an errata to disclose and discuss this risk – which the FEIR had found less than significant in light of the project’s design features and required mitigation – from both procedural and substantive standpoints.  It stated that “the errata’s belated mention of the project’s potential to increase wildfire risks does not adequately disclose the increased risks relative to the baseline existing conditions.”  (Slip Opn., p. 10.)  The Court asserted that the information in the errata (as well as the applicant’s attorney letter and presentation at the final hearing) came too late in the CEQA process, apparently holding that a more substantive discussion of the assertedly increased risk of wildfire from the Project had to be included in the publicly-circulated Draft EIR.  Per the Court:  “The FEIR in this case did not contain the information in the errata nor the Philippakis letter or Board presentation, as such, it came too late and may not be considered when evaluating the sufficiency of the FEIR.”  (Id. at p. 14.)  (Readers will note that the Court’s statement here is technically factually inaccurate since the errata actually was part of the FEIR; nonetheless, it is apparent that the Court likely actually meant to convey that the information should have been included either in the DEIR or another CEQA document circulated for public review and comment prior to project approval.)

Substantively, the Court found that, even assuming it could be considered as part of the FEIR, the errata’s analysis was too brief and conclusory to satisfy CEQA’s impact disclosure and analysis requirements.  While the errata noted that there are multiple sources of human-caused ignition of wildfires, it did not attempt to quantify the increased risk occasioned by the Project, or how and to what extent such risk was reduced by mitigation measures or project design features.  Per the Court, the errata’s general reference to the Project’s Wildfire Prevention Plan and project design features was insufficient as an analysis of the project’s fire risk impacts and related mitigation because there was not an adequate analytical connection made between the errata’s acknowledged increased risk and the efficacy of the plan’s prevention measures and project design features to reduce that risk to a less-than-significant level.

Despite the fact that the Wildfire Prevention Plan was initially developed and proposed by the applicant, and thus was not a mitigation measure subsequently developed and imposed as part of the CEQA process, the Court rejected the County’s argument that the EIR properly treated the Plan as a component of the Project, rather than treating and analyzing its provisions separately as CEQA mitigation measures, and also rejected the FEIR’s “conclusory” analysis that the Plan (along with other project components and design features) rendered wildfire-related impacts less than significant.  Per the Court, “the FEIR must sufficiently discuss the project’s potential adverse effect of human-caused ignitions and analyze in some detail how the project’s design (or mitigation measures) alleviate such risks.”  (See Slip Opn., p. 16, fn. 9, & at pp. 17-18, citing, inter alia, Lotus v. Department of Transportation (2014) 223 Cal.App.4th 645, 655-658, this blog’s 2/14/14 post on which can be found here.)

While the Court was thus clear in its Opinion that the FEIR’s existing analysis of the project’s risk, and the extent to which that risk was reduced by design features or mitigation measures, did not pass CEQA muster, it was less helpful in providing guidance regarding what an adequate analysis might look like.  In an illuminating passage of its opinion, the Court stated:

The errata in no way explains the extent to which bringing in over 4,000 new residents to the largely undeveloped project site increases the risk of human-caused wildfire over the existing baseline risk.  For example, given the general decline in human-caused wildfires, how many ignitions occur per 1,000 people in a wildland-urban interface, and how much has that rate reduced as wildfire safety and education has increased?  And  how many wildfires ignite over 1,000,000 miles driven by vehicles with and by vehicles without catalytic converters, and how has the mix of vehicles on public roads affected those statistics over time?”

(Slip Opn. at 15, fn. omitted.)

At the CLE CEQA Conference recently held in San Francisco, when a presenter discussing the case asked the environmental consultants in the audience of CEQA practitioners whether they believed the data referenced by the Court even existed, the only response was “no.”  The Court’s Opinion did qualify its above-quoted passage with a footnote stating “[o]f course, we do not require that these specific questions be answered in the FEIR” and “[n]or must the risk be quantified if that is not possible.”  Still, suggesting in a published opinion that an EIR should “quantify” a complex and apparently unquantifiable “wildfire risk” is singularly unhelpful to local agencies and their consultants attempting in good faith to comply with CEQA’s informational discussion and disclosure mandates.

The FEIR’s Analyses of the Project’s GHG Emissions Impacts and An Off-Site
Back-Up Well’s Water Supply Impacts Were Adequate, And County’s Adoption
of A Carbon Credit Purchase Condition Was Not Prejudicial Error
Despite The Uncertain Availability of Such Credits

After addressing wildfire impacts, the Court turned to two other issues in the published portion of its Opinion:  (1) the County’s requirement as a condition of project approval that the developer purchase (if available) carbon credits (more specifically, 14,865 GHG emissions credits from a CARB-approved registry source) to potentially offset or mitigate the project’s GHG emissions, and (2) impacts related to potential project water usage from an offsite back-up well.

With respect to the former, which Petitioners challenged as not meeting the stringent legal requirements for GHG emissions offset credits to qualify as valid CEQA mitigation, the Court essentially found that Petitioners had missed the point:  the FEIR concluded that Project GHG impacts would in any event be significant and unavoidable because carbon credits were uncertain to be available and thus could not be considered as feasible and effective mitigation.  There are only a limited number of qualified credits available, and despite the condition it remained uncertain that the project developer would be able to obtain such carbon offset credits in the number required (or at all).  Accordingly, since “Petitioners cite[d] no authority… that CEQA bars [agencies] from considering potentially beneficial measures that [they] deem too uncertain to be feasible[,]” and since the FEIR and County did not treat or rely on such credits as feasible or effective mitigation – and the FEIR duly recognized (and the County duly overrode) the acknowledged significant and unavoidable GHG emissions impact – the Court found no prejudicial error. 

Interestingly, it was at the urging of the project opponents themselves that the County’s errata added the GHG emission credits purchase obligation as part of the mitigation monitoring and reporting plan for the Project, while at the same time finding that mitigation or alternatives with respect to the project’s significant and unavoidable GHG emissions were infeasible.  (Moreover, Petitioners themselves suggested the County could have avoided the alleged defect by simply eliminating the GHG offset condition altogether, a position highlighting the insubstantial and hyper-technical nature of their meritless argument.)

The takeaway here is that the Court of Appeal upheld the use of carbon credits in a context where (1) they were not included and relied on as feasible CEQA “mitigation measures” sufficient to reduce an impact to a less than-significant level, (2) the FEIR acknowledged that GHG impacts were in any event significant and unavoidable, (3) the County made overriding findings addressing such impacts in approving the Project, and (4) there was no contention of any adverse impacts resulting from the condition, or that it deprived the public or County’s decision-makers of relevant information about adverse impacts.  In sum, there was no prejudicial error.

Finally, turning to the potential usage of the offsite well for project water supplies, the FEIR anticipated that on-site water sources would be sufficient for the project’s needs, and recognized that the project proposed the offsite well only as a backup source that would be used only in the (unlikely) event it was required.  Because of that contingent use, and other uncertainties, the issue of foreseeability of impacts came into play.  The FEIR disclosed the volume of water the offsite well could produce, but because of uncertainty as to the nature and characteristics of the relevant aquifer from which it would draw, and uncertainty as to how much (if any) of that water the project would ever actually need to use, it could not quantify the potential impact to the aquifer without engaging in impermissible speculation.  Because the County’s factual analysis in the FEIR was supported by substantial evidence, and speculation was not required, the analysis of the offsite well usage and related impacts was held legally adequate.

Conclusion and Implications

Because the Court of Appeal found the FEIR deficient on one additional ground that was different from the FEIR defect found by the trial court – i.e., failure to adequately disclose and analyze wildfire ignition risks – it reversed the judgment in part, affirmed in part, and remanded to the trial court to issue a new writ consistent with the Opinion.

While the First District’s Opinion clearly rejected the FEIR’s and errata’s analysis of the Project’s potential wildfire-related impacts as inadequate, it unfortunately offered little in the way of concrete guidance or predictability about what an adequate impact analysis under CEQA would look like.  One of its key points is that: “Failure to separately identify and analyze the significant impacts of the fire risk to the Project area and its baseline existing conditions before proposing mitigation measures violates CEQA.”  (Slip Opn., p. 18.)  Beyond this, the Court also seems to be saying that the FEIR needs to first analyze project impacts in terms of fire risks on baseline conditions without taking into account any of the project’s components or features (including the Wildfire Prevention Plan) that are designed to avoid or mitigate such risks; and then only later factor in and separately analyze the efficacy of the project components as if they were CEQA-imposed mitigation measures.  Such an analysis would seem to involve positing and analyzing a hypothetical project – and one less safely designed than the proposed project –and also blurring the conceptual line between components of the project as proposed and subsequent mitigation measures imposed as part of the CEQA process, a distinction recognized in numerous CEQA precedents.

Yet elsewhere the Opinion states it “do[es] not prescribe the appropriate manner of discussing the project’s potentially significant effects” and “do[es] not hold that the County must analyze the project’s environmental impacts on wildfire ignitions with and without the Wildfire Plan.”  (Id. at p. 17.)  But the Court also suggests the EIR discussion must be adequate to inform the public of the “efficaciousness of the Wildfire Plan” and that it would apparently also be helpful to employ unspecified “industry standard modeling tools.”  (Id. at p. 18.)  Still elsewhere, the Court seems to strongly suggest quantified studies are needed to analyze the impacts of 4,000 new humans on baseline ignition risks in the project area, although it also acknowledges it may not be possible to quantify the added risk.  (Slip Opn., at pp. 14-15 & fn.8.)  Perhaps, and unfortunately for the County and its environmental consultants – and CEQA practitioners generally – the required analysis to some extent seems to fall into the “I know it when I see it” category.

In any event, because it is published in relevant part and addresses a “hot-button” issue of increasing interest in the realm of CEQA – namely, analysis of wildfire-related impacts from a low-density development project to be located in a “wildlands-urban interface” – the case warrants close attention from CEQA practitioners, lead agencies, and project developers.

The authors do feel compelled to note here that rural California counties and their decision-makers – perhaps more so than anyone – are keenly aware of wildfire risks and also have the need and right to approve well-planned and designed developments, and that CEQA was not intended as a population control statute.  In focusing so heavily on the “ignitions” component of wildfire risk, the Court of Appeal here seems not to have appreciated the distinct possibility that the new fire station and fire-fighting capabilities and other features that are part of this project, if implemented, may well make the entire project area, including existing neighboring structures where fires might start or spread, safer than it is under the existing condition by keeping fires from growing into wildfires and spreading, even if they are started.

Still, as did the trial court’s ruling, the Court of Appeal’s Opinion upheld the vast majority of the EIR’s analysis against Petitioners’ many challenges.  Notable is the case’s treatment of the condition requiring the purchase of carbon offset credits of uncertain availability, which reasonably allows agencies to require applicants to purchase such credits to the extent available, even if that availability is uncertain, while not actually relying on them as feasible mitigation to render GHG emissions impacts insignificant.  Common sense counsels that such requirements might actually produce some environmental benefit, and at worst are in the nature of “chicken soup.”

The case’s approach to foreseeability in the context of potential water-supply related impacts from the off-site well also helpfully reaffirms that CEQA’s duties to study and disclose impacts are (thankfully) limited by principles of reasonableness, and that foreseeing the unforeseeable or engaging in speculative analysis is not required of an EIR.





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.