By Michael Wilmar and Jeffrey Forrest

In Citizens For Responsible Equitable Environmental Development (CREED) v. City of San Diego Redevelopment Agency, 2005 Cal. App. LEXIS 1850, the California Court of Appeal, Fourth District, recently rejected the appeal by opponents, CREED, of a hotel development project claiming that the City of San Diego Redevelopment Agency (“City”) violated CEQA when the City approved the hotel project without first requiring a project-specific EIR.

CREED argued that a project-specific EIR was required because the 2002 project-specific initial study concluded the cumulative impacts of the hotel project were significant and not fully mitigable with respect to air quality and traffic. Citing the landmark case, No Oil, Inc. v. City of Los Angeles (1974) 13 Cal. 3d 68, 75, CREED argued that an agency is required to prepare an EIR “whenever it can be fairly argued on the basis of substantial evidence that the project may have significant environmental impact.” However, the court held that this non-deferential fair argument standard does not apply to judicial review of an agency determination that a project’s potential environmental impacts were adequately analyzed in a prior program EIR. Instead, once a program EIR has been conducted, an agency’s decision to require a supplemental or subsequent EIR will be upheld by a court “if the administrative record as a whole contains substantial evidence to support the determination that the changes in the project or its circumstances were not so substantial as to require major modifications of the EIR.” (Sierra Club v. County of Sonoma (1992) 6 Cal. App. 4th 1307, 1318). This deferential standard reflects the fact that a detailed review has already been performed.

Next, CREED argued that a project-specific EIR was required because the same court had already ruled in Natural Resources Defense Council v. City of Los Angeles, (2002) 103 Cal. App. 4th 268, that a program EIR may not be used as an EIR for a project proposed after its certification. However, the court distinguished the facts in the NRDC case from this CREED case. In doing so, the court has provided guidance for both agency planners and project developers in determining when a project does not require a project-specific EIR.

In the NRDC case, the Port of Los Angeles prepared a 1997 program EIR in connection with various contemplated port improvements. In 2000, the U.S. Corps of Engineers prepared a project-specific EIR assessing the environmental impacts of deepening various shipping channels at the Port. In 2001, the City of Los Angeles approved a permit for China Shipping to construct a container terminal at the Port claiming the project’s impacts had been adequately analyzed in the 1997 and 2000 EIRs. However, the City of Los Angeles also entered into an agreement with China Shipping addressing various site-specific environmental matters and stated in the agreement that the city was concerned that not all the environmental issues had been addressed in the prior EIRs. Furthermore, the City of Los Angeles never prepared a project-specific initial study to determine whether the container terminal’s environmental impacts had been fully assessed in the prior EIRs.

In contrast, in CREED, the City performed a project-specific initial study. Even though that study concluded there would be significant impacts to air quality and traffic that could not be fully mitigated, the court found that these cumulative impacts would not be greater than those identified in the prior EIR. Furthermore, the study noted that the hotel project was consistent in land use and intensity with the Community Plan, which had zoned the area for hotels and motels and forecasted 5,880 additional hotel rooms as part of the planning area’s ultimate capacity buildout scenario. Finally, the program EIR for the Community Plan provided that it would be used for project-specific approvals within the planning area.

Despite the court’s reliance on Sierra Club and its effort to distinguish NRDC, there remains no uniform state rule on the proper standard of review when a City approves a subsequent project based on an earlier program EIR. Such cases raise two issues: (1) is the activity within the scope of the program analyzed in the program EIR; and (2) if so, does the activity nevertheless require a project EIR because it has impacts that were not addressed in the program EIR. The three major cases that have addressed these issues, Sierra Club, CREED, and Santa Teresa Citizen Action Group v. City of San Jose (2003) 114 Cal.App.4th 689, all agree that a lead agency’s answer to the second question should be reviewed under the deferential substantial evidence standard. However, the standard of review for addressing the first question depends on which jurisdiction the project falls under. In the First Appellate District, Sierra Club holds that a lead agency’s answer to the first question should be reviewed under the fair argument standard. (Sierra Club v. County of Sonoma, 6 Cal. App. 4th at p. 1319). In the Fourth and Sixth Appellate Districts, CREED and Santa Teresa respectively, hold that a lead agency’s answer to the first question should be reviewed under substantial evidence standard, even though both cases say they rely on Sierra Club. (CREED, at pp. 17 26, citing Santa Teresa). Thus, CREED spells relief for projects in the Fourth Appellate District, but until such time as the California Supreme Court decides to settle this conflict in the case law, there is no uniform state rule and lingering questions remain for projects in appellate jurisdictions that have not ruled on this issue.

A detailed analysis of these cases and the issues they raise is beyond the scope of this article, but will be the subject of a future article.

For more information please contact Michael Wilmar and Jeffrey Forrest. Michael B. Wilmar is special counsel in the Real Estate, Land Use and Natural Resources Practice Group in the firm’s San Francisco office. Jeff Forrest is an associate in the San Diego office of Sheppard, Mullin, Richter & Hampton, LLP. He is a member of the Real Estate, Land Use and Natural Resources, and Environmental Practice Groups.