City Erred In Certifying Environmental Impact Report That Misdescribed Project’s Objectives

January 22, 2013 | Bulletin No. 1016320.1

In a case demonstrating the importance of a well-crafted statement of objectives, the appellate court held that a city erred in certifying a final environmental impact report (“EIR”) and approving a project because the EIR “misstated” the project’s objectives and the misdescription skewed its consideration of project alternatives.  (Habitat Watershed Caretakers v. City of Santa Cruz (--- Cal.Rptr.3d ----, Cal.App. 6 Dist., November 27, 2012).

Update

Please see our updated Legal Alert on this case entitled, "UPDATE:  Court Of Appeal Changes Its Mind On The Issue Of Whether A City Misdescribed A Project’s Objectives", March 29, 2013

Facts

The Regents of the University of California (“Regents”) adopted a long range development plan (“Plan”) in 2006, which contemplated the development of an area of the University of California, Santa Cruz (“UCSC”) campus known as “North Campus.”  North Campus is located in an unincorporated area of the County of Santa Cruz (“County”) and is outside the territorial boundaries of the City of Santa Cruz (“City”).  The City and County and other parties challenged the Regents’ adoption of the Plan and certification of an EIR for the Plan. 

The Regents, City, and other parties entered into a comprehensive settlement agreement (“Agreement”) to resolve the litigation regarding the development of North Campus.  The Regents agreed to restrict enrollment and increase on-campus housing.  The Regents’ housing commitment was contingent upon (1) City seeking approval of the local agency formation commission (“LAFCO”) for an amendment to its “sphere of influence” (“SOI”), and (2) City agreeing not to oppose Regents’ request for extraterritorial water and sewer services to North Campus.  The Agreement provided that, if LAFCO denied the amendment to the SOI, Regents would be excused from the housing commitment.    

City certified an EIR to amend its SOI to include the undeveloped land that comprises North Campus so City could provide extraterritorial water and sewer services there.  An SOI is “a plan for the probable physical boundaries and service area of a local agency” that is determined by LAFCO.  The Legislature vested LAFCO in each county “with the power and duty ‘to approve with or without amendment, wholly, partially, or conditionally, or disapprove’ a city’s request for an SOI amendment.”  A city has to receive written approval from LAFCO before it can provide new or extended services outside of its jurisdictional boundaries.  A city may provide “services outside of its jurisdictional boundaries only if the services will be provided ‘within its sphere of influence in anticipation of a later change of organization.’” 

The project at issue here required approval of (1) City’s application for the amendment of the SOI, and (2) the application of the Regents as real party in interest for approval of its agreement with City for extraterritorial water and sewer services for North Campus.  In dry years, City suffers from a water supply deficit.  City prepared a draft EIR that found one significant and unavoidable direct impact of the project is that there is an inadequate water supply to serve the planned development for the North Campus under existing and future multiple dry year conditions. 

The draft EIR provides that the objective of the project is to implement City’s “obligations set forth in the Comprehensive Settlement Agreement with regard to provision of water and sewer services to the UCSC North Campus area, and specifically to amend the City’s Sphere of Influence boundaries to include this area to provide such services.”   The final EIR modified the description of the project’s objectives to state that the objectives are (1) implementation of City’s and UCSC commitments as set forth in the Agreement “as related to submittal of concurrent applications to LAFCO to facilitate the provision of water and sewer services to the UCSC North Campus area,” (2) amendment of the City’s SOI to include portions of the North Campus area of UCSC, and (3)  City’s provision of extraterritorial water and sewer services to the North Campus.   

The City certified a final EIR in August 2010.  Habitat and Watershed Caretakers (“Habitat”) filed a petition challenging City’s certification of the final EIR.  The trial court denied Habitat’s petition.

Decision

Habitat argued, among other things, that the draft EIR misdescribed the project because it stated that the Agreement required City to provide water services to the North Campus when in fact the Agreement only required City to initiate an application to LAFCO to amend City’s SOI.  Habitat asserted that City had no obligation to approve new water in any quantity to the North Campus and that the Agreement does not excuse City from its duty under the California Environmental Quality Act (“CEQA”) to assess whether it should provide water to the North Campus, and if it should, in what quantity and what conditions and mitigations should be imposed.

The project at issue is the amendment of the SOI and the provision of extraterritorial water and sewer services.  The Agreement obligated City to provide water services to North Campus if LAFCO approved both City’s SOI application and the Regents’ application.  The court noted that “the purpose of the final EIR was to provide the LAFCO decision makers with information about the environmental consequences of their decision regarding the project.” 

The court found that the statement of the objectives of the project “in the draft EIR and the final EIR did not describe the underlying purpose of [the] project but only the nature of the project.”  The project’s purpose was not to fulfill the requirements of the Agreement because the applications from both the City and the Regents had already been filed before City prepared the draft EIR.  The Agreement did not require anyone to obtain approval from LAFCO because LAFCO was not a party to the Agreement.  The amendment of the SOI “and the provision of water to North Campus described the project, but they did not describe its purpose.”  The court concluded that the only inference that can be drawn from the draft EIR and the final EIR was that the project had two underlying purposes:  (1) to provide the water needed to develop the North Campus, and (2) satisfy the requirements that would trigger the Regents’ obligation to honor the housing commitments it made in the Agreement.

The court concluded the draft EIR and final EIR misstated the project’s objectives.  The court further concluded the misstatements skewed the consideration of alternatives and mitigation measures.  Because “the draft EIR and the final EIR failed to discuss any feasible alternative, such as a limited-water alternative, that could avoid or lessen the significant environmental impact of the project on the City’s water supply,” the discussions of alternatives did not comply with CEQA. 

The court of appeal directed the trial court to vacate its decision and grant Habitat’s petition in part.  The trial court must direct City to vacate its certification of the final EIR and approval of the project and to correct the defects in the project description and the discussion of alternatives.

Questions

If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Eric N. Robinson, Jeffrey L. Massey or Leslie Z. Walker | 916.321.4500