Real Estate and Land Use

Accepting a Permit “Under Protest” Does Not Work in the Coastal Zone

(Lynch v. California Coastal Commission (2014) 229 Cal. App. 4th 658)

Author: Sean Matsler

Why it matters: Lynch v. California Coastal Commission firmly dispels the myth that a Coastal Development Permit can be accepted and acted upon “under protest.” Once the benefits of a Coastal Development Permit are accepted, i.e., the approved project is built, the permit applicant loses the ability to challenge permit conditions even if those conditions were objected to during the permit process and accepted “under protest.”

Facts: Barbara Lynch and Thomas Frick (Applicants) own adjacent, bluff-top homes in Encinitas. In 2003, they applied to the City of Encinitas for authorization to replace an existing wooden erosion control structure and mid-bluff wall. As part of the project, they also planned to remove and replace the lower section of an existing stairway along the bluff face that provided beach access from their homes. The City approved the project in 2009 on the condition that the applicants obtain a Coastal Development Permit (CDP) from the California Coastal Commission.

While their application before the Coastal Commission was pending, a severe storm caused the bluff below the Lynch home to collapse, destroying portions of the wooden erosion control structure, mid-bluff wall, and stairway. In light of this damage, the Applicants’ CDP application was revised to include the demolition of the remainder of the wooden erosion control structure, construction of a new 100-foot-long shotcrete seawall, installation of up to 75 feet of mid-bluff geogrid protection, and the reconstruction of the lower section of the stairway that was lost as a result of the storm.

The CDP approved by the Coastal Commission allowed for the demolition and reconstruction of the seawall and the installation of the mid-bluff geogrid protection, but imposed conditions that (1) precluded reconstruction of the lower section of the stairway; (2) limited the permit’s duration to 20 years; and (3) required recordation of a deed restriction that acknowledged the Applicants’ agreement to comply with the terms and conditions of the CDP and that the CDP conditions constituted covenants, conditions and restrictions running with the land for the duration of the permit. Barbara Lynch and Thomas Frick filed a petition for writ of mandate challenging the conditions precluding them from rebuilding the lower section of the stairway and limiting the permit’s duration to 20 years. They concurrently signed and recorded the deed restriction, complied with the other conditions, and proceeded with construction.

Decision: The court decided that the Applicants waived their right to challenge the CDP conditions when they signed and recorded deed restrictions agreeing to those conditions and then accepted the permit’s benefit by constructing their project. The court cited the equitable maxim: “He who takes the benefit must bear the burden” and labeled the Applicants’ attempt to violate the terms of the recorded deed restriction as “deliberate subterfuge.” The fact that the Applicants voiced their opposition to the challenged conditions before the Coastal Commission approved the CDP did not change this result. The court noted that there are two exceptions to the general waiver rule, but neither applied in this case. The first exception allows a developer to proceed with development while simultaneously challenging a condition of approval. (Government Code Section 66020(a), (d)(2).) But this exception only applies to conditions imposed by local agencies that “divest the developer of money or a possessory interest in property.” It does not apply to conditions imposed by state agencies, like the Coastal Commission, or conditions that restrict the manner in which a developer may use his or her property. The second exception applies when an agency imposes a new condition on a permit for a later phase or a project that is under way. The court refused to set new precedent by allowing an “under protest” exception for challenges to nonfee conditions.

Practice Pointer: If you want to challenge a condition of approval, do not accept the benefit granted by that condition, e.g., by initiating the development that was the subject of the condition or complying with the condition. Also bear in mind the very short limitation period – 60 days – to file challenges to permit conditions under the Coastal Act.

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Substantial Evidence Standard Applies to Historic Resource Determination in a Mitigated Negative Declaration

(Citizens for the Restoration of L Street v. City of Fresno (2014) 229 Cal. App. 4th 340)

Author: Todd Nelson

Why it matters: Although the “fair argument” standard is applied to a court’s review of a mitigated negative declaration, the more deferential “substantial evidence” standard of review applies to a lead agency’s initial determination of whether a building or district is a historical resource for purposes of CEQA. The case also serves as a reminder to jurisdictions that they must appropriately delegate the authority to make CEQA determinations to their nonelected decision-making bodies.

Facts: The City of Fresno (City) approved a residential infill project that also required the demolition of two houses built in 1906 and 1910. One had been designated as a “Heritage Property” by the City; the other had not received any historical designation. Both houses were in a state of disrepair, and had undergone numerous and significant alterations, causing a loss of historical integrity.

The City prepared an initial study and mitigated negative declaration (MND) for the project, which stated that neither of the two houses would qualify as historic resources under CEQA. However, the City’s notice of intent to adopt the MND did not identify the fact that demolition permit approvals would be required for the project, or the fact that the City’s Historic Preservation Committee (HPC) would have any role in reviewing the project, much less that the HPC would be the entity reviewing and approving both the demolition permits and the MND. At its meeting regarding the project, the HPC determined that neither of the two houses were historical resources, and adopted the MND. The HPC also approved the two demolition permits.

Citizens for the Restoration of L Street (Citizens) appealed the HPC’s adoption of the MND to the City Council, claiming that the HPC did not have the authority under the City’s municipal code (Code) to make CEQA determinations. (Citizens did not, however, appeal the HPC’s approval of the demolition permits.) The City Council denied the appeal of the MND, and upheld the HPC’s finding that the two houses were not historical resources under CEQA. Citizens challenged the City Council’s decision, claiming that the administrative record supported a “fair argument” that the project may have significant impacts on historical resources. Shortly after the petition was filed, the City issued the demolition permits, and the two houses were torn down.

The trial court held that the HPC was not authorized to approve the MND, and the City Council’s subsequent action on Citizens’ appeal did not cure this defect. However, the trial court did not require the City to prepare an EIR. The City filed an appeal challenging the trial court’s ruling on whether HPC could approve the MND, and Citizens filed a cross-appeal challenging the court’s decision that an EIR was not required.

Decision: The Court of Appeal denied the appeals filed by both the City and Citizens. In denying the City’s appeal, the court first acknowledged that CEQA authorizes lead agencies to delegate the authority to both adopt environmental documents and approve projects to nonelected, subordinate bodies. The court further acknowledged that, under the Code, the HPC had proper authority to approve the demolition permits. In reviewing the Code, however, the court concluded that while the HPC was authorized to both “participate” in the environmental review process and “review and comment” upon permit actions and planning efforts as they relate to historical resources, the Code did not grant explicit or implied authority to the HPC to complete or approve a project’s environmental review. Turning to the City’s claim that the City Council’s subsequent approval of the MND cured the delegated authority defect, the court concluded that, because the City Council only considered the MND and not the demolition permits (because the permits had not been appealed), it did not act as the final, independent decision-making body for both the project and the environmental review, as CEQA requires. Moreover, prior to its meeting, the City Council failed to provide the required notice of its intention to adopt the MND, along with the required 20-day public review period. Finally, although proposed CEQA findings were included in the staff report prepared for the City Council, the court found no evidence in the minutes or transcript of the meeting that the council members had considered and determined, based on their own independent judgment and analysis, that the project would not have a significant effect on the environment. As a result, the court upheld the trial court’s ruling that the City’s approval process did not comply with CEQA’s requirements.

In denying Citizens’ appeal regarding the appropriate standard under CEQA for the designation of historic resources, the court upheld its prior decision in Valley Advocates v. City of Fresno (2008) 160 Cal.App.4th 1039, which held that the substantial evidence standard applies to a lead agency’s threshold question of whether a building or site is a historical resource for purposes of CEQA. Citizens had argued that Valley Advocates was inconsistent with all other precedent regarding negative declarations, and this threshold question should instead be reviewed under the fair argument standard, consistent with the standard of review for MNDs.

The court rejected this argument, deciding that the Legislature intended for lead agencies to make a discretionary decision about the historic significance of certain resources. Such a decision must occur during the initial stage of the CEQA review process, so that the lead agency can determine (1) whether the proposed activity is a project that might cause a direct physical change in the environment, and (2) whether the project is exempt from CEQA. Therefore, the court explained that a lead agency must first decide whether an object is a historical resource before it applies the fair argument standard to determine whether the project may have a significant impact on the environment. The court found that the initial decision is subject to the deferential substantial evidence test, which is that the agency’s decision will be upheld if supported by any substantial evidence in the record even if there is contrary evidence in the record.

Practice Pointers:

  • Local agencies should carefully review their codes and ordinances to make sure that decision-making bodies are properly authorized to act on project approvals and the project’s associated environmental review, as required by CEQA.
  • This decision confirms that a lead agency’s initial determination of whether a resource is historic is subject to the deferential substantial evidence standard of judicial review.
  • If an action is appealed, the whole of the action should be the subject of the appeal, otherwise the appeal can be rendered meaningless as in this case, where the homes were demolished notwithstanding the pending litigation.

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Local Agency Can Rely on Federal Permit Clearance as Valid CEQA Mitigation

(Citizens Opposing a Dangerous Environment v. County of Kern (2014) 228 Cal.App.4th 360)

Author: Bryan LeRoy

Why it matters: An EIR’s reliance on the future review and clearance of a project by a federal agency can be adequate mitigation for potentially significant impacts under CEQA.

Facts: Two applicants in Kern County requested a zone change and conditional use permit in order to build and operate a wind farm in the Tehachapi Wind Resource Area. The County prepared and certified an Environmental Impact Report (EIR) for the project in accordance with the California Environmental Quality Act (CEQA) and approved the applications. The EIR indicated that the project’s wind turbine generators (WTGs) might pose a significant safety hazard to aircraft and gliders using a nearby private airport because the application proposed a maximum height of 500 feet.

In response to the potentially significant impact identified in the EIR, the project approval required the applicant to obtain a “Determination of No Hazard to Air Navigation” from the Federal Aviation Administration (FAA) for each WTG prior to issuance of building permits. FAA regulations establish standards for determining obstructions in navigable airspace. Citizens Opposing a Dangerous Environment (CODE) challenged the approval by claiming, among other things, that the County’s EIR failed to describe a mitigation measure that could avoid or minimize significant impacts to aviation safety and that the County abdicated its statutory duty under CEQA by deferring to the analysis and determination of another agency.

Decision: Key among the arguments raised by CODE was the point that the FAA cannot enforce its own “hazard/no-hazard” determinations because it has no authority to halt construction or require design changes. However, the court quickly noted that the County retained the authority to enforce the mitigation by requiring a “No Hazard” determination before the County would issue building permits for the WTGs. As the County staff explained in a report to the Board, if the FAA determines that the project would result in a potential obstruction unless reduced to a specific height, the project proponents would be required to work with the FAA to resolve any adverse effects on aeronautical operations or abandon the project.

CODE also argued that past actions showed the mitigation would not be effective. Presumably, the FAA had issued prior No-Hazard determinations where CODE claimed hazardous aviation impacts still existed. The court responded by clarifying that whether the proposed mitigation measure will really work is not the appropriate question. Instead, the court explained, the proper inquiry is whether the public agency had a sufficient basis in expert opinion and other evidence to conclude that the potential impact of the project had been mitigated to a level of insignificance. In this situation, the court found that it was entirely reasonable for the County to rely on the expertise of the federal agency charged with the entire field of aviation safety.

Practice Pointers: When relying on the regulatory approval by another agency to mitigate a potentially significant impact:

  • Make sure the mitigation is an enforceable means to avoid or minimize the impact. If the other agency does not have the authority and responsibility to limit the project, make sure the lead agency will withhold permits unless the effects are appropriately limited.
  • Make sure the record demonstrates the expertise of the other agency.

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