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California Building Industry Association v. Bay Area Air Quality Management District

California Court of Appeals, First District, Fifth Division

August 13, 2013

CALIFORNIA BUILDING INDUSTRY ASSOCIATION, Plaintiff and Respondent,
v.
BAY AREA AIR QUALITY MANAGEMENT DISTRICT, Defendant and Appellant.

Superior Court of Alameda County, No. RG10548693 Hon. Frank Roesch judge

Cox, Castle & Nicholson, Michael H. Zischke, Andrew B. Sabey and Christian H. Cebrian for Plaintiff and Respondent.

Brian C. Bunger, Randi L. Wallach; Shute, Mihaly & Weinberger, Ellison Folk and Erin B. Chalmers for Defendant and Appellant.

Perkins Coie, Stephen L. Kostka and Geoffrey L. Robinson for Center for Creative Land Recycling, Burbank Housing, Bay Planning Coalition, San Francisco Housing Action Coalition, First Community Housing, San Mateo County Economic Development Association, Nonprofit Housing Association of Northern California and Bridge Housing as Amici Curiae on behalf of Plaintiff and Respondent.

Matthew Vespa for Sierra Club and Center for Biological Diversity as Amicus Curiae on behalf of Defendant and Appellant.

Burke, Williams & Sorensen, Thomas B. Brown and Matthew D. Visick for League of California Cities and California State Association of Counties as Amici Curiae on behalf of Defendant and Appellant.

Kurt R. Wiese, General Barbara B. Baird, District Counsel, Veera Tyagi and Ruby Fernandez, Sr. Deputies District Counsel for the South Coast Air Quality Management District; Thomas E. Montgomery, County Counsel and Paula Forbis, Sr. Deputy County Counsel for San Diego County Air Pollution Control District Counties as Amici Curiae on behalf of Defendant and Appellant.

NEEDHAM, J.

The California Environmental Quality Act (CEQA; Pub. Res. Code, § 21000 et seq.) requires public agencies to conduct an appropriate environmental review of discretionary projects they carry out or approve and to prepare an environmental impact report (EIR) for any project that may have a significant effect on the environment. (Pub. Res. Code, §§ 21151, 21100, 21080, 21082.2.) The CEQA Guidelines[1] encourage public agencies to develop and publish “thresholds of significance” to assist in determining whether a project’s effect will be deemed significant. (CEQA Guidelines, § 15064.7.)

Here we consider whether the promulgation of thresholds of significance by a public agency is itself a “project” subject to CEQA review. We conclude it is not and reverse a superior court judgment that issued a writ of mandate invalidating thresholds of significance promulgated by defendant and appellant the Bay Area Air Quality Management District (the District). We also conclude the court’s order cannot be upheld on alternative grounds and reverse an award of attorney fees made to respondent the California Building Industry Association (CBIA) under Code of Civil Procedure section 1021.5.

I. BACKGROUND

The District is a local agency charged with limiting nonvehicular air pollution in the San Francisco Bay Area. It is authorized to adopt and enforce rules and regulations regarding the emission of pollutants, and to ensure state and federal ambient air quality standards are met. (Health & Saf. Code, §§ 39002, 40000, 40001, subd. (a), 40200.) Among its other activities, the District monitors air quality, engages in public outreach campaigns, issues permits to certain emitters of air pollution and promulgates rules to control emissions. (Health & Saf. Code, §§ 42300, 42301.5, 42315.)

CEQA requires public agencies such as the District to analyze, disclose, and mitigate significant environmental effects of projects they carry out or approve. (Muzzy Ranch Co. v. Solano County Airport Land Use Com. (2007) 41 Cal.4th 372, 379-381 (Muzzy Ranch).) When adopting rules or issuing permits, the District will act as the lead agency for CEQA purposes. The District does not act as a lead agency for CEQA review of residential and commercial development projects in the area, though it may act as a responsible or commenting agency on projects being analyzed by other agencies.[2]

The CEQA Guidelines encourage agencies to publish the “thresholds of significance” used to determine the significance of a project’s impact on the environment. (CEQA Guidelines, § 15064.7(a).) In 1999, the District published thresholds of significance concerning certain air pollutants, along with guidelines concerning their use and CEQA analysis of air quality issues in general. The District’s 1999 thresholds and guidelines were “intended to serve as a guide for those who prepare or evaluate air quality impact analyses for projects and plans in the San Francisco Bay Area, ” and set forth the levels at which toxic air contaminants (TACs) and certain types of particulate matter would be deemed environmentally significant. The thresholds and guidelines did not include significance levels for greenhouse gases (GHGs), which affect the earth’s ability to absorb heat into the atmosphere and are now generally recognized as contributing to global climate change. (See Rialto Citizens for Responsible Growth v. City of Rialto (2012) 208 Cal.App.4th 899, 938 (Rialto Citizens).)[3]

In 2006, the California Legislature passed the Global Warming Solutions Act (Assem. Bill No. 32;[4] Health & Saf. Code, 38500 et seq.), which calls for the reduction of GHG emissions to 1990 levels by 2020. (See Association of Irritated Residents v. State Air Resources Bd. (2012) 206 Cal.App.4th 1487, 1490.) In 2008, the Legislature passed The Sustainable Communities and Climate Protection Act (Sen. Bill No. 375[5]), requiring regional land use and transportation planning to reduce GHGs, and allowing for CEQA exemptions and streamlining for certain transit priority projects. (See Pub. Res. Code, §§ 21155, 21155.1, 21155.2, 21155.3, 21159.28.) The CEQA Guidelines have since been amended to include provisions concerning the significance levels of GHGs associated with a project, mitigation of GHG emissions, and guidance about tiering or streamlining the analysis of GHG emissions. (CEQA Guidelines, §§ 15064.4, 15126.4(c), 15183.5.)

In 2009, the District drafted new proposed thresholds of significance, citing (1) more stringent state and federal air quality standards, including the addition of PM2.5 (particulate matter with a diameter of 2.5 microns or less); (2) the discovery that TACs present an even greater health risk than previously thought; and (3) the growing concern with global climate change. A number of organizations, businesses, and local governments participated in public hearings, meetings, and workshops held by the District regarding the proposed revisions. One participant was CBIA, a statewide trade organization representing over 6, 500 members involved in residential and light commercial construction, including homebuilders, architects, trade contractors, engineers, designers, and other industry professionals.

During the public hearing process, CBIA and other groups, including public agencies, expressed concern the proposed thresholds and guidelines were too stringent and would make it difficult to complete urban infill projects close to existing sources of air pollution. According to these groups, EIRs would be required for many projects where they otherwise would not have been, and other projects would not be approved. If these infill projects were not feasible, they argued, developers would build in more suburban areas, thus (paradoxically) causing even more pollution due to automobile commuter traffic.

On June 2, 2010, the District’s Board of Directors passed Resolution No. 2010-06, adopting new thresholds of significance for air pollutants, including GHGs, TACs and PM2.5 (the Thresholds). The District published new “CEQA Air Quality Guidelines” (District Guidelines), which were designed to “help lead agencies navigate through the CEQA process” and which describe “step-by-step procedures for a thorough environmental impact analysis of adverse air emissions due to land development in the Bay Area.” The District’s 2010 Guidelines include tables setting forth the new Thresholds and explaining they “represent the levels at which a project’s individual emission of criteria air pollutants or precursors would result in a cumulatively considerable contribution to the [Bay Area]’s existing air quality conditions.” They also suggest methods of assessing and mitigating impacts found to be significant.

The District Thresholds for GHGs were designed to help the Bay Area reach its regional target for reducing GHG levels by 1.6 million metric tons over 10 years and are intended to be consistent with existing California legislation. For land use developments, a project’s operations generally will not be deemed to have a significant impact if the project complies with a qualified GHG Reduction Strategy consistent with A.B. 32 goals or produces annual emissions of less than 1, 100 metric tons per year of carbon dioxide equivalent (CO2e), or 4.6 metric tons of CO2e/per service population (residents and employees)/per year.

The Thresholds set significance levels for TACs and PM2.5 based on daily emissions from construction and operations. In addition to daily emissions, the Thresholds set significance levels for TACs and PM2.5 based on “Risks and Hazards” to receptors (persons who would be living or working on the site of the proposed project or within the area). Under this measurement, significance will be found if the cumulative emissions from all TAC sources within 1, 000 feet exposes receptors to an increased cancer risk greater than 100 in a million, or if the TACs from any single source within 1, 000 feet exposes receptors to an increased cancer risk of greater than 10 in a million. Additionally, an incremental annual average increase of more than.3 microgram PM2.5 from a single source or.8 microgram from all sources would be deemed cumulatively significant. At the level of general and specific plans, the TAC Thresholds set overlay “buffer” zones around existing and planned sources of TACs and within 500 feet of all freeways.

On November 29, 2010, CBIA filed a petition for writ of mandate challenging the Thresholds. (Code Civ. Proc., § 1085.) After the trial court granted the District’s demurrers to causes of action alleging the Thresholds were preempted by state law and amounted to an invalid “underground regulation” (see Bollay v. Office of Administrative Law (2011) 193 Cal.App.4th 103, 106-107), the court conducted a hearing on the merits of the following claims: (1) the District should have conducted a CEQA review of the Thresholds before their promulgation because they constitute a “project” within the meaning of CEQA; (2) the TAC/PM2.5 Risks and Hazards Thresholds were arbitrary and capricious to the extent they required an evaluation (impermissible under CEQA) of the impacts the environment would have on a given project; (3) aspects of the Thresholds were not based on substantial evidence; and (4) the Thresholds failed the “rational basis” test because sufficient evidence did not exist for their approval.[6]

The trial court agreed the District should have conducted an environmental review under CEQA before issuing the Thresholds. In its statement of decision, it concluded the District’s “promulgation of the Thresholds is a ‘project’ under CEQA and, as such, [the District] is obligated by CEQA to evaluate the potential impact on the environment consequent to the project.” The court characterized the Thresholds as “a discretionary activity directly undertaken by a public agency which may cause a reasonably foreseeable indirect physical change in the environment” and found the evidence in the record sufficient to support CBIA’s claim the Thresholds “might discourage infill development, encourage suburban development or change land use patterns....” The court rejected the District’s argument that, assuming the Thresholds were a project, they were exempt from CEQA review under the “commonsense exemption, ” which applies “[w]here it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment....” (See CEQA Guidelines, § 15061(b)(3); Muzzy Ranch, supra, 41 Cal.4th at pp. 385-386.) CBIA’s remaining arguments were not addressed. Judgment was entered in favor of CBIA and a writ of mandate was issued directing the District to set aside its approval of the Thresholds. CBIA filed a motion seeking attorney fees under Code of Civil Procedure section 1021.5 and was awarded $422, 293.75.

The District appeals the judgment and the award of fees.[7] It argues (1) the promulgation of the Thresholds was not a “project” under CEQA and did not require prior environmental review; (2) assuming the Thresholds were a project, they were exempt from CEQA review under the commonsense exemption; (3) CBIA and its members had a pecuniary interest in the litigation that precludes a fee award under Code of Civil Procedure section 1021.5; and (4) the fee awarded was excessive because it did not take into account the claims on which CBIA did not prevail.

CBIA urges us to uphold the trial court’s judgment and fee award and to additionally resolve in its favor the claims the trial court found unnecessary to address: (1) the TAC/PM2.5 Thresholds are arbitrary and capricious because they require an analysis of existing pollution on a proposed project; (2) the Thresholds were not supported by substantial evidence; and (3) the District’s approval of the Thresholds was arbitrary and capricious.[8]

DISCUSSION

I. CEQA REVIEW OF THRESHOLDS OF ...


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