CEQA Allows Developers to Recover Administrative Record Costs when Reimbursing Agency

by Best Best & Krieger LLP

Appellate Victory for Developers and Public Agencies

A developer can recover the cost of preparing a California Environmental Quality Act administrative record, even when the lead agency, not the developer, actually prepared it, an appellate court has held. This Fifth District Court of Appeal decision, issued last week, is a victory for public agencies and real parties in interest who prevail in CEQA litigation. So long as Public Resources Code section 21167.6’s procedures are followed, public agencies can be reimbursed by real party in interest developers for administrative record preparation costs, and developers can then seek recovery of those costs from unsuccessful challengers.

In the partially published opinion in Citizens for Ceres v. City of Ceres, the court found that a real party in interest, Wal-Mart, was not barred from recovering the costs it expended to reimburse the City for preparing the administrative record in litigation brought by Citizens for Ceres, so long as the record was prepared in one of three specific ways described in Public Resources Code section 21167.6. The administrative record is the documentation that an agency considers or relies upon during its evaluation of a project.

The case arose from Citizens’ challenge to the City’s certification of an environmental impact report and approval of a shopping center anchored by a Wal-Mart Supercenter. The trial court rejected the challenge and the Court of Appeal upheld it in the unpublished portion of the opinion. Pursuant to section 21167.6, Citizens elected to have the City prepare the administrative record, and the City directed its outside counsel to do so. An agreement between Wal-Mart and the City required Wal-Mart to reimburse the City for all the City’s litigation expenses, which necessarily included expenses arising from the City’s preparation of the record.

Citing past case law, the trial court noted that a party can be awarded the cost of preparing the administrative record only if it was prepared in one of the ways described in Section 21167.6: 1.) by the agency, 2.) by the plaintiff, or 3.) by another method agreed on by the agency and plaintiff. Based on this, the trial court found that Wal-Mart was barred from recovering the cost of preparing the administrative record because Citizens had requested that the City, not Wal-Mart, prepare the record.

On review, however, the Court of Appeal disagreed and found that Wal-Mart could recover the costs it paid to the City for the record’s preparation. Specifically, the Appellate Court found that the record was, in fact, prepared by one of the statutorily approved methods: the agency prepared it. Furthermore, nothing in section 21167.6 limits the identity of prevailing parties that can recover the costs expended for the record’s preparation. As such, the Court held that an award of costs to Wal-Mart would be consistent with section 21167.6.

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