Harmonizing CEQA’s rules and principles is, to say the least, not always easy, and is often quite challenging. The relevant concepts are often in tension, or are so malleable that they can be argued or construed to conflict. For example, environmental review must commence at the earliest “practicable” time, in order to make fully informed decisions at a project’s formative stages and avoid undue project “momentum” or “post-hoc rationalizations”; yet it should not occur so early that it would be “speculative” or not “meaningful” due to lack of sufficient data from a crystallized development project proposal. To cite another example, a “project” refers to the “activity being approved,” but also to the “whole of an action” and not just individual discretionary permits that trigger CEQA review. And, a “project approval” occurs at the lead agency’s earliest commitment to a “definite course of action” regarding a proposed project. Fuzzy concepts like these can be difficult to apply, and supply ample fodder for CEQA litigation. They tend to produce heavily fact-specific decisions offering unclear guidance to lead agencies and project proponents.

These observations seem particularly apt in the areas of “project description” and “piecemealing” challenges, which appear to be perennial favorites of CEQA plaintiffs seeking to decertify an EIR and thereby stop a project (or projects). The Fourth District’s recently-published decision in Banning Ranch Conservancy v. City of Newport Beach (4th Dist., Div. 3, 2012) 211 Cal.App.4th 1209 shows that wading into CEQA’s “murky” waters in these areas doesn’t always make them pellucid, and requires an intensive analysis of the facts of the particular case.

The key issue in Banning Ranch Conservancy (and the only one this post will discuss) was whether the City of Newport Beach’s EIR for an 18.9-acre park project on City-owned property along the West Coast Highway (the “Sunset Ridge Park Project” or “Park Project”) misdescribed the project and “piecemealed” its CEQA review by omitting analysis of a proposed mixed-use residential development on an adjacent 400-acre property (the “Newport Banning Ranch” or “NBR Project”) controlled by Newport Banning Ranch LLC (“NBR LLC”). The NBR Project property was in unincorporated Orange County, but within the City’s Sphere of Influence (SOI), and while the City’s General Plan favored and supported acquisition of the 400 acres for open space and park uses, it also provided for concentrated mixed-use/residential village development on it if such acquisition did not occur. The City’s General Plan, in any event, contemplated the construction of two unbuilt “Primary Roads” across the NBR Project property as depicted in its Master Plan, and County’s Plan also contemplated roads (through different ones) traversing that property. The Notice of Preparation (NOP) for the NBR Project EIR was published 2 months prior to the NOP for the City’s Park Project, so environmental review of the NBR Project (in the form of an EIR) was already publicly-known to be underway when the City formally proposed undertaking its Park Project.

Due to proximity, geography, and circumstances of property ownership, the two projects became tied together to some extent by potentially shared transportation infrastructure. Specifically, the City needed an easement from the West Coast Highwayover the NBR Project property to construct its park access road, and NBR LLC needed an access road to its proposed development offWest Coast Highway. In exchange for the easement facilitating its Park Project, the City agreed to design and construct its Park access road to match the alignment and grades of the “Bluff Road” that NBR LLC proposed to serve the NBR Project development, and to include a new signal and accommodate new turn lanes at the common access point off West Coast Highway.

Plaintiff Banning Ranch Conservancy (BRC) – undoubtedly with the goal of hindering and stopping the NBR Project – saw an avenue to do so by challenging the City’s Park Project since it facilitated the Bluff Road infrastructure which would be needed for the NBR Project. BRC contended that since the Bluff Road And the Park access road were “one and the same,” then so were the two projects, in reality, but a single “project” under CEQA, and that if that proposition were true, then City’s Park EIR was obviously deficient. BRC sued the City on its Park Project EIR for allegedly “piecemealing” and failing to describe the full extent of the “project,” i.e., for failing to include in its Park Project EIR full analysis of the NBR Project proposed by NBR LLC on its adjacent property. The trial court didn’t buy BRC’s argument, and denied the writ; the Court of Appeal affirmed.

After reciting the usual preliminaries on CEQA’s purpose, the definition of “project,” and the importance of EIRs, the Court began its real substantive analysis of the “piecemealing” issue by stating the test expressed in the California Supreme Court’s 1986 Laurel Heights decision: “an EIR must include an analysis of future expansion or other actions if: (1) it is a reasonably foreseeable consequence of the initial project, and (2) the future expansion or action will be significant in that it will likely change the scope or nature of the initial project or its environmental effects.” This standard was to be applied to “the facts of each case.” Laurel Heights was a “future expansion” case; it held a university improperly piecemealed CEQA review of a project involving the relocation of its pharmacy school where it analyzed only the school’s initial move into 100,000 square feet of a building, despite school officials’ public announcements in the record that they ultimately intended to expand into the building’s entire remaining 254,000 square feet when it became available upon expiration of a long term lease.

Immediately after stating the Laurel Heights test, the Court of Appeal observed: “This is where the law gets murky.” It explained that while courts are familiar with the “reasonably foreseeable” concept of the test’s first prong, they haven’t comprehensively analyzed the meaning of “consequence” in this context, and it indicated that cases tend to be fact-driven with unhelpful circular legal analysis. It proceeded to “group the leading [piecemealing] cases” into two camps: (1) the intended or necessary “first step toward future development” cases (into which category it placed Laurel Heights) and (2) the “legally compels or practically presumes completion of another action” cases. The first group finds piecemealing where CEQA review omits analysis of reasonably foreseeable future development actions which are subsequent stages of or catalyzed by the reviewed action; the second group finds piecemealing where the action omitted from review was a necessary prerequisite to or part of the reviewed action as either a legal or practical matter. The Court then referenced another group of cases upholding review of related actions as separate projects where they “have different proponents, serve different purposes or can be implemented independently.”

Applying these “murky” CEQA principles to the case before it, and reviewing the matter independently as an issue of law, the Court found the Park Project was properly treated as separate from the NBR Project for CEQA purposes. While the latter project was “reasonably foreseeable”—indeed, it was already proposed by NBR LLC, and an NOP was issued before the Park Project NOP–and would “likely change the scope or nature of the [Park Project] or its environmental effects” by virtue of design changes to the Park Project’s access and highway infrastructure, it was not a “consequence” of the Park Project. While the Park’s access road “eased the way” somewhat for the NBR Project, it was at most “only a baby step” toward that development, and certainly a far smaller step then those involved in the “first step” cases; it involved no proposed zoning change for the NBR Project, and was not being built to induce that project. Moreover, as with the “no piecemealing” cases the two projects have different proponents (a developer with property outside the City and a City), different purposes (mixed/use residential vs. park), and “the City can and will build the park regardless of any development on Banning Ranch.” Finally, the City’s General Plan calls for construction of the access road or its equivalent regardless of whether Banning Ranch was acquired for open space or annexed for more intensive development.

The Fourth District undoubtedly got this one right, and the extensive and laborious analytical process it took to get to the correct result seems intellectually honest. What, perhaps, could have been added to the analysis was a bit of “common sense” – which the Supreme Court has recently observed applies at every level of CEQA review. Setting aside cases of project descriptions omitting necessary prerequisites to or necessary components of the proposed project (clearly not the case here), CEQA’s prohibition against piecemealing applies to artificially dividing a single, integrated project into segments so as not to reveal its full extent, in order to “game the system”. The object of such piecemealing is evading otherwise-required environmental review, e.g., by avoiding an EIR for the current (and future) segments, or by reducing impact disclosures to gain approval, thus getting the “camel’s nose in the tent” and gaining a better environmental baseline or otherwise easing review and approval of the (undisclosed) future segment. That obviously wasn’t going on, either, in Banning Ranch Conservancy since the allegedly omitted action was already undergoing CEQA review through a full EIR process as a separate project.

What “common sense” suggests to me was going on here was simply this: a zealous CEQA plaintiff’s attempt to “take down” the NBR Project by any possible means, including litigation attacking the City’s separate Park Project EIR in order to try to scuttle even a “baby step” towards some common transportation infrastructure that could, but would not necessarily, serve to benefit the proposed (but not approved) NBR Project. Fortunately, despite CEQA’s “murky” definitions and principles concerning “piecemealing” and “project(s),” the Court of Appeal apparently understood this and refused to allow the City’s Park Project to be held hostage in BRC’s legal war on the NBR Project.

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 over forty-five years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 3d, 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, construction, management, title insurance, environmental law, and redevelopment and land use. For more information, visit www.msrlegal.com.