In an opinion filed June 15, and ordered partially published on July 13, 2016, the Fourth District Court of Appeal reversed the trial court’s judgment requiring the County of San Bernardino to prepare an EIR instead of a mitigated negative declaration (MND) for its approval of a conditional use permit (CUP) authorizing a 9,100 square-foot Dollar General retail store on a 1.45-acre lot in Joshua Tree. Joshua Tree Downtown Business Alliance v. County of San Bernardino (Dynamic Development, LLC, Real Party in Interest) (4th Dist., Div. 2, 2016) ___ Cal.App.4th ___, 2016 WL _____, Case No. E062479.

The Court of Appeal held the trial court properly rejected the plaintiff group’s arguments that the County failed to consider the project’s urban decay potential at all; that its IS/MND’s project description was required to and improperly failed to disclose the end user’s identity; and that the project was inconsistent with the Joshua Tree Community Plan’s goals and policies favoring small businesses. However, it held the trial court erred in finding that substantial evidence supported a fair argument that the project may have significant urban decay impacts and that an EIR was thus required. (This post will not address the end-user disclosure issue, which was discussed in the opinion’s unpublished portion, or the general plan consistency issue, which is covered in my partner Bryan Wenter’s Land Use Developments blog post here.) The Court of Appeal therefore rejected the plaintiff group’s contentions raised by cross-appeal, and reversed the trial court’s judgment granting a writ.

Key takeaways the Court of Appeal’s analysis of the “urban decay” issue include:

• “[A]lthough CEQA requires public agencies to evaluate the possible negative environmental effects of constructing big-box retail stores (e.g., air pollution from traffic, noise and light pollution, destruction of open space), the fact that they may drive smaller retailers out of business is not an effect covered by CEQA …. Only if the loss of business affects the physical environment – for example, by causing or increasing urban decay – will CEQA be engaged.” (Quoting South Orange County Wastewater Authority v. City of Dana Point (2011) 196 Cal.App.4th 1604, 1614.)
• “CEQA does not define urban decay” but “the law [provides] that urban decay requires a significant effect on the physical environment.”
• The County determined “that there was no evidence that the Project would cause either negative economic impacts or urban decay.” The trial court’s contrary conclusion was based on the comments in the administrative proceedings of a 12-year Joshua Tree resident, business owner, and attorney, Celeste Doyle, which it characterized as “present[ing] substantial evidence in the form of facts and reasonable assumptions predicated on such facts to support a fair argument that the Project may have a significant environmental effect in the form of urban decay. She discusses that general retail needs being met by existing local retail and nearby larger stores. Therefore, this retail sales store will take sales away from existing businesses. A statement regarding downtown store closures is based on this business owner’s knowledge of the downtown market and existing demand. In addition, given the level of investment discussed, a reasonable assumption could be made that if these businesses close, they will cause long-term vacancies of retail space resulting in degradation of the town’s appearance and blight, which would support a conclusion of a physical deterioration. While Ms. Doyle may not be an expert in a traditional sense, her experience and observations regarding the local business community and retail markets demonstrate[] sufficient relevant personal observations that consist[] of facts and reasonable assumptions predicated upon such facts.”
• The Court of Appeal saw it quite differently than the trial court, pointing out that argument, speculation, and unsubstantiated opinion do not constitute substantial evidence, nor do “[c]omplaints, fears, and suspicions about a project’s potential environmental impact ….” Further, while members of the public may “provide opinion evidence where special expertise is not required[,]” the “[i]nterpretation of technical or scientific information requires an expert evaluation” and public testimony “on such issues does not qualify as substantial evidence.” “[D]ire predictions by nonexperts regarding the consequences of a project do not constitute substantial evidence.” (Citing Gentry v. City of Murrieta (1995) 36 Cal.App.4th 1359, 1417.)
• Applying these principles, the Court of Appeal held: “Here, Doyle was not an expert in any relevant area. Indeed, the trial court acknowledged this (in a backhanded way) by conceding that she ‘may not be an expert in the traditional sense ….’ She was a business owner and a lawyer. She was not an economist; she did not claim so much as an MBA. Thus, she was not qualified to opine on whether the Project would cause urban decay.”
• Further, per the Court: “[S]he did not offer any particular factual basis for her opinions. She did not claim that her business or any other business in Joshua Tree had ever actually suffered from competition with a national chain; she had not taken any surveys or done any studies. Thus, whether viewed as lay or expert opinions, her conclusions were speculative.”
• The Court of Appeal went on to note numerous other conclusions that could be drawn, and that Doyle’s “limited factual observations … actually cut against her opinions.” For example, substantial physical investments by an existing local market “seems inconsistent with a conclusion that [it] was operating so close to the margin that competition would drive it out of business.” Further, the observation that Joshua Tree residents already shopped at chain stores four to five miles distant in Yucca Valley suggested local residents were “underserved” and that Joshua Tree businesses “had already proved able to withstand competition from national chains.”
• Finally, CEQA requires that “the lead agency [be given] the benefit of the doubt on any legitimate, disputed issues of credibility” (citing Citizens for Responsible Equitable Environmental Development v. City of Chula Vista (2011) 197 Cal.App.4th 327, 330-331), and since here “at a minimum, there were legitimate issues regarding the credibility of Doyle’s opinions” the Court held “the County could deem them not substantial evidence.”

While experts are expensive, which is why many plaintiff groups do not hire them, they are often essential – and always so in technical or scientific areas – to providing the “substantial evidence” necessary to support a “fair argument” of possible environmental impact that will force lead agency preparation of an EIR. The bottom line in this case seems to be that plaintiffs lacked an economics expert, expert economic studies or surveys – or even a “big box” retail development to plausibly target with their “urban decay” argument. CEQA is not an economic competition statute, and is not concerned with a project’s economic or social impacts. As this case illustrates, urban decay is a rather complex CEQA issue requiring expert opinion evidence to support a fair argument not only that severe economic impacts will result, but that they would in turn lead to significant adverse “blighting” impacts on the physical environment – a prerequisite to trigger an EIR under CEQA. Without any expert opinion evidence to address an impact area that clearly requires substantial economic expertise to prove, plaintiffs here simply fell short.