Friends Of The Sierra Railroad v. Tuolumne Park and Recreation District  (filed January 12, 2007; certified for publication February 8, 2007, F050117) __ Cal.App.4^th__

By Lori Wider

Introduction

In this case plaintiff Friends of the Sierra Railroad (Friends) challenged the approval and sale of land from Tuolumne Park and Recreation District (District) to Tuolumne Band of Me-Wuk Indians (Real Party).  The land sold contained a portion of an historic railroad right?of?way.  Friends contended that the sale constituted a “project” under CEQA, requiring prior environmental review.  The Court of Appeal held that the transfer of the land was not a “project” under CEQA under the circumstances of this case.  While some development of the property was reasonably foreseeable, review of possible impacts to the historical resource would be premature in the absence of any specific proposal for development.

“Like any other agency action—property disposal—even of a historical resource—is not a project if too little is known about environmental impacts to which it might lead to allow those impacts to be meaningfully analyzed.”  Without a plan identifying impacts, no meaningful environmental review could be conducted.  The court made clear that it was not holding that alienation of real property by a public agency is never a project under CEQA and that, to the contrary, provisions in the CEQA Guidelines suggest that such disposal can sometimes be a project.

Background

Real Party purchased property on the western edge of Tuolumne City, formerly occupied by a lumber mill that had been destroyed by fire in the 1960’s.  A small portion of the railroad right?of?way, undisputedly an historical resource and owned by the District, ran across a portion of Real Party’s property.  News reports indicated that acquisition of the right?of?way would facilitate Real Party’s development of its property.  Real Party’s proposal for acquisition of District land in exchange for other property and a building owned by Real Party was submitted by the District to the Tuolumne County Planning Commission for a general plan consistency determination.  Real Party submitted a letter to the Planning Commission indicating that it would use the right?of?way for “public hiking trails.”  The Commission’s determination of consistency was based upon use of the land solely as a public trail, and the determination applied irrespective of whether the party to whom the land would be transferred was a private party or public entity.

Friends argued to the District that because the railroad right?of?way was an historic resource, CEQA required the District to conduct environmental review before transferring the property.  The District did not conduct any environmental review prior to approving and transferring the property, nor did it make any formal determination regarding CEQA.

Court Rejects Argument that Land Transfer Constituted “Project” Requiring Prior Environmental Review

The Court of Appeal did not disagree with Friends’ prediction that future development by Real Party would impact the right?of?way acquired by Real Party, and that Real Party acquired the land to further its plans to develop.  However, the court held that, “[I]n spite of this,” environmental review would be premature because there were no “particular plans” for the development.  Without “some plan with an identifiable impact on the right?of?way,” no meaningful CEQA review process could be carried out.

In reaching its decision, the court concluded that the land transfer was not a “project” within the meaning of CEQA.  Recognizing that (1) development of Real Party’s property was reasonably foreseeable; (2) it was reasonable to infer that Real Party purchased the property to facilitate development; and (3) development could impact the historical resource, the court determined that these factors did not trigger CEQA review.

The court noted that no specific plans were presented or proposed by Real Party and that the only statement regarding use of the right?of?way was contained in Real Party’s letter to the Planning Commission wherein it stated the proposed use for public hiking trails.  Environmental review under CEQA must occur “far enough down the road toward an environmental impact to allow meaningful consideration in the review process of alternatives that could mitigate the impact.”  The court did not focus on what Friends claimed was Real Party’s plans for future development, stating that even if Real Party had specific plans affecting the right?of?way but “made a strategic decision not to present them until after the termination of this litigation, the fact remains that ordering CEQA review in the absence of a plan involving an identifiable impact would not be meaningful.”

Friends argued that the District should have compelled Real Party to submit plans before the District made a decision on the land transfer.  The court rejected this argument, stating that “[W]e do not think CEQA compels public agencies, or empowers petitioners, to force property owners to create or disclose development plans for the purpose of accelerating environmental review.”  The District had the power to extract conditions on the sale of the property to the extent any seller of real property would, but it not have any duty to compel disclosure of plans.

Friends also argued that once the land was sold, the District had no opportunity to conduct environmental review regarding the consequences of the sale. As the court pointed out, CEQA review was not avoided or improperly transferred because review of development plans would be by Tuolumne County and not the District.  “The fact that future review will have to be performed by another agency cannot convert a meaningless review process into a meaningful one or convert a nonproject into a project.”

Friends further argued that “an activity is a project if a petitioner makes a ‘reasonable argument’ that the activity will result in a potentially significant environmental impact.”  The court interpreted this argument to be application of the fair argument standard, requiring an EIR where there is substantial evidence that a project will result in a significant environmental effect.  The court noted that it knew of no authority which explained whether the fair argument standard applied to determining whether an activity is a project.  In any event, the court determined that there was no project in this case, even if the fair argument standard applied.

Court Rejects Other CEQA Arguments

The court also rejected Friends’ contention that the CEQA Guidelines’ “common sense exemption” (Cal. Code Regs., tit.14, § 15061, subd. (b)(3)), as applied in Davidon Homes v. City of San Jose (1997) 54 Cal.App.4^th 106, supports a conclusion that the land transfer was a project for purposes of CEQA.  In Davidon Homes, opponents challenged the City’s adoption of an ordinance which authorized lifting a moratorium on certain hillside developments only after invasive geologic testing was conducted (to determine landslide vulnerability).  Opponents challenged the City’s determination that the ordinance was exempt from CEQA under the common sense exemption (where it can be seen with certainty that there is no possibility of a significant environmental impact, the activity is not subject to CEQA).  The appellate court in Davidon Homes held that opponents had made a reasonable argument that a significant impact was possible, and that the exemption would only apply if the City had shown with certainty that there was no possibility of a significant impact.  Friends analogized this case to the District’s actions, even though the District had not relied on the common sense exemption or any other CEQA exemption. Friends contended that since it made a reasonable argument of the possibility of a significant environmental impact, the District had the burden to show that such impact was not possible.  The court did not agree with Friends’ logic, stating that the common sense exemption means that an activity is not a project if there is no possibility of a significant impact and not that every activity is a project unless it has no possibility of a significant impact. “Some activities are not projects because no identifiable environmental change is reasonably foreseeable, even though it cannot be said with certainty that no significant environmental change is possible.”

Finally, the court also rejected Friends’ argument that the transfer is a project because, under federal regulations, Real Party could apply to the Bureau of Indian Affairs to place the land in trust. In this case, Friends argued, the land would not be subject to state and local regulatory authorities, thereby rendering future CEQA review impossible.  Distinguishing Friends of Sierra Madre (2001) 25 Cal.4^th 165, which involved an ordinance delisting historic properties from a local register of historic landmarks, the court found that the land transfer resulted in a change of ownership and not a change in protected status and that Friends of Sierra Madre did not show that the land transfer was a project.  Transfer of the land to Real Party is not a project because “it is too many steps removed from any actual impact.”  After the transfer, Real Party would have to request and receive approval of trust status.  Implementation would be preceded by federal environmental review of a development plan that would affect the right?of?way.  Even assuming these events, the impact is unknown.

The court made it clear that it did “not hold that a public agency’s alienation of real property it wishes to dispose of is never a CEQA project.”  Sale of surplus government property is categorically exempt under Section 15312 of the CEQA Guidelines under certain circumstances (property has no environmental value and other conditions met).  This suggests that in other circumstances, sale of surplus government property can be a project.

For more information please contact Lori Wider.  Lori Wider is special counsel. in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco Office.