Background

A long time ago, in a legal galaxy far, far away, Emperor Reagan signed the California Environmental Quality Act (“CEQA”) into law.  For many years, the “dark forces” that had wrought the adverse environmental impacts giving rise to CEQA – land developers and the public agencies granting their approvals – labored under its ever-expanding yoke.  Many litigation battles were fought, and many won by the heroic Jedi of the environmental plaintiffs’ bar and their NGO clients, firmly establishing the preeminence and vast reach of CEQA’s seemingly beneficent empire into the far-flung corners of the legal universe.  CEQA’s “force” was such that no project with the potential to effect a physical change in the environment, unless granted legislative or magisterial exemption, escaped its watchful eye and mitigating powers.


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In a 30-page opinion originally filed July 3, and certified for publication on July 18, 2019, the Third District Court of Appeal affirmed the trial court’s judgment denying a writ petition challenging, on zoning law and CEQA grounds, the City of Sacramento’s approval of a high-rise infill housing project in its midtown area.  Sacramentans for Fair Planning v. City of Sacramento (2500 J Owners, LLC, Real Party in Interest) (2019) 37 Cal.App.5th 698.  The project, known as the Yamanee project, calls for construction of a mixed-use condominium building 15 stories (and 178-1/2-feet) high on a .44-acre site at the southeast corner of 25th and J streets.  It would total 177,032 square feet of space on the 19,200 square foot site, consisting of one floor of commercial uses, three levels of parking, one floor of resident amenities, and 10 floors containing 134 residential condominiums.

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A lawsuit filed June 10, 2019, in the U.S. District Court for California’s Central District, and conspicuously reported on last month in Law360, takes dead aim at defendants who are alleged to have filed and threatened frivolous CEQA suits for the sole purpose of extorting monetary settlements – in this case, from plaintiffs alleging they are economically vulnerable Hollywood hotel project developers who were forced to capitulate to defendants’ extortionate demands.

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The California Legislature has enacted new Public Resources Code § 21159.25, effective as of January 1, 2019 (Stats. 2018, c. 670 (A.B. 1804)), which extends much of the substance of the existing CEQA Guidelines’ Class 32 categorical exemption for “infill development” (14 Cal. Code Regs., § 15332) to certain multi-family housing projects in urbanized, unincorporated county areas.  While largely patterned after the Class 32 exemption, the statute thus has a few unique and significant twists and limitations, as explained below.

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Spring now being practically “in the air,” a bit of CEQA “spring cleaning” seems appropriate – so here’s a brief look at the status of some significant CEQA-related cases that are now pending before our Supreme Court, or in which its review has been sought:

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In a published opinion filed February 13, 2019, the Fourth District Court of Appeal (Division 3) reaffirmed the need for a CEQA litigant challenging a coastal development permit to appeal to the Coastal Commission before suing.  Fudge v. City of Laguna Beach (Hany Dimitry; Real Party in Interest) (2019) 32 Cal.App.5th 193.  The Court refused plaintiff’s invitation to make the simple complex, and followed published precedents requiring a plaintiff to exhaust the statutory administrative remedy of an appeal to the Commission to ripen a litigation challenge.

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Most real estate developers would likely agree that, even when correctly applied and complied with, CEQA can be an onerous law which can significantly complicate, delay, increase the cost of, and in some cases (particularly where CEQA litigation is involved) even preclude projects.  But what recourse does a project applicant have under the law when CEQA is misapplied – and blatantly so – by a local agency which denies approval of a project that is clearly exempt from CEQA on the meritless basis that extensive (and expensive) CEQA review is required?  When the developer’s only recourse is time-consuming and expensive litigation to obtain a writ of mandate setting aside the agency’s illegal action subjecting the project to CEQA, can the developer who succeeds in obtaining the writ recover from the public agency compensation and damages resulting from the temporary “taking” of all reasonable economic use of its property?

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In an opinion filed December 18, 2018, and later ordered published on January 10, 2019, the First District Court of Appeal affirmed a judgment denying appellant citizen groups’ writ petition challenging the City of St. Helena’s approval of an 8-unit, multifamily housing project and related demolition and design review.  McCorkle Eastside Neighborhood Group, et al. v. City of St. Helena, et al. (2019) 31 Cal.App.5th 80.  The decision applied the basic principle that CEQA does not apply to ministerial project approvals, and further clarified that CEQA does not apply to “mixed” discretionary/ministerial approvals where the “discretionary component” does not give the agency the authority to mitigate environmental impacts.  It held that because the City’s discretion under its local design review ordinance does not extend to addressing environmental effects it does not implicate CEQA, and therefore the City’s reliance on the CEQA Guidelines’ Class 32 exemption was unnecessary.

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A few recent developments and upcoming events in the CEQA world bear quick mention:

  • The BART Housing Bill:

Under AB 2923, BART now has limited land use regulation authority on its own lands near its stations. BART is required to adopt Transit-Oriented Development (TOD) standards for its lands by July 1, 2020, and its action in this regard is subject to CEQA review, with BART acting as the lead agency.  The new law declares the minimum TOD standards for this purpose (setting minimum density and height limits, and maximum parking limits) are set forth in BART’s 2017 TOD Guidelines.  Development projects which meet TOD zoning requirements and provide 30% affordable housing will qualify for streamlined, “by-right,” ministerial approval with no additional CEQA review.  The law also requires cities and counties to adopt zoning standards for BART-owned lands, conforming to BART’s adoption of TOD standards for height, density, parking, and FAR for eligible TOD projects, within 2 years of BART’s action, or by July 1, 2022 if BART fails to act.  The new law is intended to increase California’s housing supply and provide some relief from its housing crisis, and could enable BART to develop up to 20,000 residential units and 4.5 million square feet of office/commercial uses on 250 acres of BART-owned lands by 2040.  My partner Bryan Wenter’s excellent post on this new law can be found here.


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