Court Upholds Reliance On Unspecified Mitigation Bank

In a case regarding a proposed "town center" project in Rancho Cordova, the Third District Court of Appeal has overturned nearly every portion of a Superior Court ruling in favor of environmentalists who oppose the development.

The unanimous three-judge appellate panel determined that, on almost all claims, either the City of Rancho Cordova had met the requirements of the California Environmental Quality Act or the plaintiff California Native Plant Society (CNPS) was prevented from litigating certain issues because it had not raised them during the administrative process. The court did rule that the city had violated a provision in its general plan requiring the city to coordinate with the U.S. Fish and Wildlife Service (USFWS) and the California Department of Fish and Game (CDFG) on endangered species habitat mitigation.

The central issue was whether the environmental impact report for the 530-acre project had to identify exact locations where vernal pool habitat would be re-created off-site as mitigation for destruction of 15.6 acres of wetlands. The certified EIR and project conditions permitted the developer – a partnership of Angelo Tsakopolous and K. Hovnanian Homes – to use mitigation banking to ensure there would be no loss in the total amount of wetlands. The Native Plant Society argued the city should have named exact locations and studied the environmental impacts of creating the new wetlands.

However, the court found that as long as the city identified the development project's impacts and formulated measures to mitigate those impacts, the city could defer the details. The city, wrote Justice Ronald Robie, "was entitled to rely on the results of a future study to fix the exact details of the implementation of the mitigation measures the agency identified in the EIR."

James Moose, the developers' attorney, called the court's CEQA ruling "unremarkable" but a relief. Sacramento County Superior Court Judge Patrick Marlette had ruled the city did have to identify and study the exact mitigation locations – a ruling that had "taken on a life of its own," among CEQA practitioners, Moose said. However, the lower court's ruling was contrary to the no-net-loss standard that practitioners have employed and courts have accepted since the 1980s, he said.

"You're not sure what mitigation bank you are going to be using," Moose explained. In this case, the lengthy administrative record identified potential mitigation sites, even though the EIR did not. Although the appellate court accepted the no-net-loss performance standard, Moose added, "It's probably not a bad practice to identify the potential universe of mitigation sites out there."

Native Plant Society attorney Keith Wagner has asked the Third District to reconsider its decision. In a request for a new hearing, Wagner argued there was no evidence the off-site mitigation measures would fully offset impacts to wetlands. He pointed to numerous comments and letters from USFWS, CDFG, the Environmental Protection Agency (EPA) and the Army Corps of Engineers (USACE) objecting to the project's potential impacts on vernal pools and Morrison Creek, a Sacramento River tributary.

"[T]he court has failed to find or identify any competing evidence in the record that supports the city's speculation and unsupported opinions that CNPS, USFWS, USEPA, USACE and CDFG somehow all ‘got it wrong,'" Wagner wrote.

The project in question is called The Preserve at Sunridge. It is proposed to contain about 2,400 single-family houses, 300 multi-family housing units, 150,000 square feet of commercial space, an elementary school and a 92-acre open space wetlands area. The project is envisioned as something of a "town center" within the Sunrise-Douglas community plan, which proposes about 20,000 housing units on 6,000 acres of open space and pasture in the Sacramento suburb of Rancho Cordova (see CP&DR Local Watch, August 2002). In 2007, the state Supreme Court struck down the EIR for the Sunrise-Douglas community plan because it did not adequately describe long-term water sources and the impacts of using those sources (Vineyard Area Citizens for Responsible Growth, Inc. v City of Rancho Cordova, 40 Cal.4th 412; see CP&DR Legal Digest, March 2007).

However, the community plan EIR was still in place during the summer of 2006, when Rancho Cordova certified the EIR for The Preserve and approved that project. State and federal agencies as well as environmentalists opposed The Preserve because it would be located in the midst of a seasonal wetlands complex that provides habitat for vernal pool fairy shrimp and vernal pool tadpole shrimp, both of which are protected by the Endangered Species Act. Although the approved project would preserve a 92-acre open space and wetlands, it would wipe out 15.6 acres of vernal pools and re-route Morrison Creek. The city did require the developers either to preserve two acres of wetlands for every acre lost, or to create new habitat on an acre-for-acre basis.

The Native Plant Society sued, arguing the city had violated CEQA and state Planning and Zoning Law provisions requiring that projects comply with a city's general plan. Judge Marlette ruled the city had violated CEQA by (1) improperly deferring mitigation of impacts on wetlands and endangered species, (2) improperly finding that wetlands impacts would be fully mitigated, and (3) failing to disclose effects of water supply plans on migrating fish in the Cosumnes River. Marlette also ruled the city violated the Planning and Zoning Law because the project was inconsistent with general plan policies regarding habitat preservation. The judge rejected some Native Plant Society CEQA contentions because the group had failed to raise the issues – exhaust administrative remedies – during the city's review. Both sides appealed.

In overturning Marlette's CEQA rulings for the CNPS, the Third District detected no improper deferral. The Third District said Marlette had confused mitigation deferral with the question of mitigation feasibility; he had rejected the wetlands mitigation as improperly deferred because mitigation measures were not adequately detailed for the city to determine whether they could be implemented.

"[C]oncerns about whether it is ‘realistically foreseeable that a mitigation measure will actually be carried out as outlined' do not raise an issue of improper deferral," Justice Robie wrote, citing Marlette's decision. "If the agency has identified one or more mitigation measures and has committed to mitigating the impact those measures address, then the principles forbidding deferral of mitigation are not implicated."

Regarding the sufficiency of evidence to support the city's findings, CNPS leaned heavily on the Vineyard decision because the city had essentially tiered The Preserve EIR off the community plan EIR. Because the state Supreme Court rejected the community plan EIR's handling of long-term water supplies and impacts to the Cosumnes River, CNPS argued similar portions of The Preserve EIR were also invalid. The city and developers countered that CNPS had never raised issues regarding water supplies or the Cosumnes River during the administrative process and, therefore, could not raise those issues in court. The Third District agreed.

"An objector cannot simply sit back and wait for the earlier EIR to be invalidated, then belatedly assert after the administrative proceeding is complete (as happened here) that the current EIR is defective because it relied on the earlier EIR that has now been invalidated," Robie wrote.

Wagner contended the court was wrong. Until the state Supreme Court issued its ruling in 2007 – after The Preserve was approved – CNPS could not know of the defects in the community plan EIR, he argued. The ongoing Vineyard litigation had made the city aware of the environmental review's shortcomings before the city approved The Preserve EIR, he contended.

Regarding general plan consistency, CNPS argued the city did not consult – as the general plan requires – with USFWS and CDFG in designing mitigation for endangered species. But the court ruled the city did in fact "consult" with the agencies; the city simply did not accept their recommendations and CNPS failed to show the city's conclusion "was not reasonable based on all the evidence," the court ruled.

However, one general plan provision requires that mitigation of impacts to special status species be designed "in coordination" with USFWS and CDFG. The city argued "consultation" and "coordination" were synonymous. The court disagreed, ruling "the mere solicitation and rejection of input from the agencies" was inadequate.

This final portion of the ruling means the project will have to return to the city, according to Moose, the developer's attorney. Still, the environmental review process will not be reopened, he said.

The Case:
California Native Plant Society v. City of Rancho Cordova, No. 057018, 09 C.D.O.S. 3669. Filed March 24, 2009.

The Lawyers:
For CNPS: Keith Wagner, Lippe, Gaffney, Wagner, (916) 361-3887.
For the city: Julia Bond, Meyers, Nave, Riback, Silver & Wilson, (510) 808-2000.
For developer Jaeger Road 530, LLC: James Moose, Remy, Thomas, Moose & Manley, (916) 443-2745.