CEQA Review

I. OVERVIEW OF CEQA DEVELOPMENTS IN 2019

A. The Supreme Court decision in August 2019 in Union of Medical Marijuana Patients held that all zoning changes are not automatically CEQA “projects;” they must still meet the statutory standard of an activity with direct impact or reasonably foreseeable indirect impact.

B. Together with the late 2018 decision on Sierra Club v. County of Fresno, on air quality analysis and EIR standard of review issues, the issuance of the Union of Medical Marijuana Patients decision cleared the backlog of CEQA cases at the Supreme Court.

C. Protecting Our Water & Environmental Resources v. Stanislaus County, regarding whether well permits are ministerial or discretionary, is still pending. In December 2019, the Supreme Court granted review in County of Butte v. Department of Water Resources, regarding whether the Federal Power Act preempts CEQA as it may apply to state hydropower licensing actions, so there are now two CEQA cases pending at the state’s highest court.

D. There were 15 decisions from the various Courts of Appeal, a lower pace in than in prior years (there were 17 decisions, but two were depublished). One of the key decisions was McCorkle Eastside Neighborhood Group that design review did not include discretion over environmental impact issues, so city had no discretion and CEQA not triggered.

E. The Legislature enacted a number of bills in 2019, mostly exemptions relating to the housing and homeless crises.

Cities are increasingly requiring development agreements to sidestep legal limits on exactions imposed during the entitlement process. Because the courts have determined that DAs are “contracts”, cities are using DAs to exact “public benefits” that the United States Constitution prevents them from requiring through the permit process. Taking this tact further, some municipal codes now mandate that developers enter into DAs as a condition to receiving their entitlements. Having forced the developer to enter into a DA, the agency then exacts “community benefits” that it can’t otherwise legally obtain.

This highly questionable approach relies on the fiction that the DA is an arms-length agreement voluntarily entered into by the developer. Forcing a developer to enter into a DA to obtain otherwise unlawful exactions, however, most likely makes the DA itself an unlawful exaction. It is not surprising, though, that many developers often agree to these exactions in order to garner the votes they need for their entitlements. Doing so is an unpleasant reality that is sometimes simply viewed as the “cost of doing business,” with acquiescence being preferable to losing a project.

Nonetheless, in our view, what’s “good for the goose is good for the gander.” If an agency wants to rely upon the “contract theory” of DAs to impose otherwise unlawful exactions, then the developer should insist on provisions to assure that the DA is treated as a contract in all respects. For example, usual rights and remedies (including, e.g., damages for breach of contract) should be incorporated into that DA.

With these considerations in mind, here are some important tips, in no particular order, to consider in the negotiation and drafting of your DA: Continue reading

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