In a published opinion filed June 13, 2023, the Second District Court of Appeal (Div. 8) affirmed the trial court’s judgment rejecting CEQA challenges to the City of Pomona’s (City) use of a statutory exemption – under Public Resources Code § 21083.3(a), (b) and CEQA Guidelines § 15183 – for its adoption of a zoning overlay district allowing commercial cannabis activities at specific locations within the City’s boundaries.  Gregory Lucas v. City of Pomona (2023) ___ Cal.App.5th ___.

Basic Factual and Procedural Background

While interesting, the complex and detailed factual and procedural background of the case is less significant for purposes of this blog than the legal principles it states and applies in reaching its CEQA holdings.  As relevant here, the City certified a Final EIR in 2014 (2014 EIR) for a General Plan Update (GPU) with a 2035 development horizon.  In 2018 and 2019, the City adopted ordinances to tax and impose licensing procedures and regulations on commercial cannabis businesses, but it was also required to designate certain parcels in the City where cannabis-related land uses would be permitted before it could accept permit applications.  Toward that end, it adopted another ordinance establishing a zoning overlay district designating such areas; that ordinance, which the City adopted after considerable study and analysis described in detail in the opinion, was the CEQA “Project” at issue in the case.

The City’s Findings and The “Sour Grapes” CEQA Litigation

The City’s adoption of the overlay ordinance was challenged by plaintiff Lucas, a disappointed property owner whose property was excluded from the permitted areas despite his repeated pleas to the City that it was an ideal location for a cannabis business that Lucas hoped would boost his property value.  In litigation seemingly motivated more by sour grapes than true environmental concerns, Lucas claimed the City violated CEQA in adopting the zoning overlay district pursuant to the exemption stated in CEQA Guidelines § 15183.  Per the Court, that exemption provides that “additional environmental review is not required for projects ‘which are consistent with the development density established by existing zoning, community plan, or general plan policies for which an EIR was certified,’ except as might be necessary to determine whether there are project-specific significant effects.”

The Court of Appeal noted the City had made unchallenged findings that the six proposed cannabis uses were consistent with and similar to existing land uses already defined in and regulated by the City’s General Plan Update and Zoning Ordinance.  The City’s expert CEQA consultant had also prepared “Findings of Consistency,” which evaluated the Project’s consistency with the 2014 EIR’s findings to determine whether it would have new or increased significant environmental effects beyond those identified in that EIR.  The Findings addressed each of the environmental issues studied in the 2014 EIR and compared the effects of the Project to those of the adopted GPU.  They found the Project would not allow development of greater intensity than allowed by the GPU and would thus not result in air quality impacts from construction or operation emissions beyond those forecasted in the 2014 EIR.  The findings reached the same conclusion as to GHG, energy consumption, land use planning, noise, public services, and traffic impacts, i.e., the Project would not result in any new or increased severity of significant impacts beyond those identified in the 2014 EIR and thus no additional environmental review or documentation was required.

After numerous hearings before the City’s planning commission and council, receipt of extensive public input, and revision of the overlay ordinance to address that input, the City Council had voted unanimously to adopt the amended version of the ordinance (which continued to exclude Lucas’s property as an eligible cannabis business site); determined it was exempt from CEQA under Guidelines § 15183; and adopted the Findings of Consistency.

While the trial court had rejected Lucas’s subsequent CEQA challenge for numerous reasons, including lack of “beneficial interest” or “public interest” standing and failure to exhaust administrative remedies, it also found (employing the substantial evidence standard of review) that the City correctly relied on the Public Resources Code § 21083.3 exemption.

The Court of Appeal’s Opinion

In its published opinion, the Court of Appeal brushed aside what it termed the “procedural issues” raised by the City, which included not just lack of standing and exhaustion, but a mootness argument based on passage of a ballot measure adopted during the litigation essentially “ratifying” the identical overlay ordinance; the Court simply assumed Lucas prevailed on those issues so that it could reach the merits of the appeal, on which it ruled against Lucas and in favor of the City on the Public Resources Code § 21083.3/Guidelines § 15183 exemption issue.

While the interested reader may wish to review the Court’s rather lengthy (49-page slip) opinion for more detail, key points include:

• Statutory CEQA exemptions, unlike categorical exemptions, “are absolute, which is to say that the exemption applies if the project fits within its terms.”  (Citation omitted.)  By contrast, categorical exemptions are subject to exceptions.
• The Guidelines § 15183 exemption “was promulgated on the authority of [Public Resources Code] section 21083.3, which provides a public agency need examine only those environmental effects that are peculiar to the project and were not addressed or were insufficiently analyzed as significant effects in the prior EIR.”  (Citing § 21083.3(a), (b).)  Section 15183(a) “does not require additional environmental review for projects ‘which are consistent with the development density established by existing zoning, community plan, or general plan policies for which an EIR was certified, except as might be necessary to determine whether there were project-specific significant effects.”
• To put a finer point on it, in approving a project meeting section 15183’s requirements, “a public agency shall limit its examination of environmental effects/impacts to those which the agency, in its initial study or other analysis, determines: 1) are peculiar to the project or the parcel on which the project would be located; 2) were not analyzed as significant effects in a prior EIR on the zoning action, general plan or community plan with which the project is consistent; 3) are potentially significant whether off-site or cumulative) and were not discussed in the prior EIR prepared for the general plan, community plan or zoning action; or 4) are determined to have a more severe adverse impact than discussed in the prior EIR.”  (Citing CEQA Guidelines, § 15183(b)(1)-(4), Pub. Resources Code, § 21083.3.)
• As the parallel provision to section 21083.3, “Section 15183 of the Guidelines is a statutory provision, not a categorical exemption – i.e., it is not among those exemptions set forth in Guidelines sections 15300 through 15333.”
• The substantial evidence standard of review, not the fair argument test, applies in reviewing an agency’s use of the Guidelines § 15183 exemption, as “[a]n agency’s finding that a statutory exemption applies to a project will be upheld if substantial evidence supports the finding of exemption.”  (Citing Concerned Dublin Citizens v. City of Dublin (2013) 214 Cal.App.4th 1301, 1311.)
• In applying the substantial evidence standard, the court reviews the administrative record to see that substantial evidence supports each element of the exemption.  Such evidence may be found anywhere in the record; it must be such as a reasonable mind might accept as sufficient to support the conclusion reached, and all conflicts in the evidence are resolved in support of the agency’s action and all reasonable inferences indulged to support the agency’s findings.  (Citations omitted.)

Applying the above principles in a detailed analysis, the Court held that the Project fell within the statutory exemption of Guidelines § 15183 and thus did not require additional environmental review.  It rejected as meritless Lucas’s “literal” argument that the Project could not be found consistent with the “development density” or “density-related standards” of the City’s general plan, community plan, or zoning policies under the guideline because those policies didn’t state any “density-related standards” for parcels in non-residential zones.  The City’s unchallenged (and now-final) determinations of similarity found that the proposed cannabis uses shared land use activity characteristics common with, and of no greater intensity, density or impact than other allowed land uses within the relevant base districts; moreover, the Findings of Consistency adopted those conclusions and included a table showing how the cannabis uses fell within existing, defined land use classifications based on them and the zoning and GPU, all of which together constituted substantial evidence the proposed activities were similar to or consistent with existing established land uses or development density.

The Court also rejected as meritless Lucas’s next “literal” argument, which was that because the 2014 EIR did not mention the words “marijuana” or “cannabis” it could not possibly have addressed significant environmental effects related to cannabis use activities.  Per the Court, these “arguments miss the point” that the City found the “proposed cannabis uses are not of greater intensity or density, nor would they generate more environmental impacts than those [uses] listed in the land use district[s] in which [they are] to be located.”  Being deemed so similar to the already existing allowed land uses, the six proposed cannabis activities “were covered by the uses contemplated in the 2014 EIR and 2013 [GPU].”

The Court also rejected Lucas’s argument that the Project was not exempt because the 2014 EIR didn’t address “unique and peculiar impacts” of cannabis businesses.  The Court noted that the overlay district does not guarantee the right to establish a cannabis-related business, only to apply for a permit, and does not cause project-specific effects peculiar to it or dissimilar to effects caused by existing businesses.  Resolving evidence conflicts and indulging inferences to support the City’s findings, the Court held substantial evidence supported the finding that the Project had no “project-specific effects” that are “peculiar” to it.

Finally, the Court rejected Lucas’s next line of attack, which was to assert that many of the Project’s environmental impacts – including traffic, air quality, greenhouse gas emissions, land use/planning, noise, and public service impacts – were not exempt from further review because they were found to be less than significant in the 2014 EIR.  The Court methodically examined each alleged impact area.  It found “[t]he Project would not increase traffic impacts to the roadway network beyond those identified in the 2014 EIR since it would not increase development intensity compared to the [GPU]” and that substantial evidence also showed it would not generate traffic hazards or site accessibility issues.  Similarly, substantial evidence showed air pollutant emissions would not be beyond those forecasted in the GPU because the Project would not allow development of greater density than allowed under the GPU, and Municipal Code regulations require odor control devices and techniques to ensure cannabis odors are not detectable off-site.  Substantial evidence supported the finding that GHG emissions from cannabis-related development under the overlay district Project would remain subject to existing base district and GPU standards regulating similar retail, commercial or industrial development in the relevant subareas, and would not result in any significant impacts beyond those identified in the 2014 EIR.  The Court reached similar conclusions with respect to land use/planning (no consistency conflicts with plans, policies or regulations not identified in 2014 EIR), noise (no unique noise impacts specific to project or beyond those identified in 2014 EIR), and public services (no need for additional police facilities or impacts beyond those identified in 2014 EIR).

The Court concluded its analysis thusly:

“There are no peculiar, project-specific characteristics that make the previous analysis inadequate, and, based on Guidelines section 15183, the proposed Project’s environmental impacts require no further study. …. [¶]  The City justifiably relied on the exemption provided in Guidelines section 15183.”

Conclusion and Implications

While the Court of Appeal seemingly might have decided this case based on lack of standing, failure to exhaust, or mootness, it instead provided helpful published guidance on the application of CEQA Guidelines 15183’s statutory exemption, which is deferentially reviewed for substantial evidence support and not under the fair argument test.  Also significant was the Court’s rejection of the plaintiff’s “literal” arguments, which were based on a particular new use not being mentioned in the prior EIR (even though other uses with similar land use characteristics were contemplated and analyzed in the EIR) and the fact that the jurisdiction’s governing regulations did not contain “density” standards for non-residential development uses (even though analysis confirmed the project had similar intensity and land use activity characteristics as the previously reviewed uses).  The Court properly chose substance over semantics and reached the common-sense conclusion that such “literal” arguments cannot defeat the exemption.  The Court helpfully reaffirmed that the exemption is statutory in nature and properly applies where substantial evidence supports an agency’s conclusions that a project’s density and/or intensity is consistent with general plan, community plan, or zoning policies that were reviewed in a prior certified EIR and that the project will not have any site- or project-specific significant impacts beyond those identified in the prior EIR.