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First Opinion Published On CEQA Energy Analysis

A city may determine that a project has no significant effects on energy consumption if it exceeds the California Building Energy Efficiency Standards, the Third District Court of Appeal has ruled.

The ruling appears to be the first on an environmental impact report's analysis of how a project might affect energy use, an area of the California Environmental Quality Act (CEQA) receiving increased attention because of concerns about climate change.
 
Opponents of a proposed WinCo Foods store in Tracy argued that the city could not rely on the energy efficiency standards, which are part of the Title 24 building code, in determining if the store and rezoning of adjacent land would have a significant effect on energy consumption. The unanimous three-judge appellate panel disagreed.
 
"The California Building Energy Efficiency Standards are meant to promote energy efficiency as the name implies," Presiding Justice Arthur Scotland wrote for the court, citing a section of CEQA on energy. "In other words, they ‘reduce the wasteful, inefficient and unnecessary consumption of energy.'"
 
The court ruled that Tracy's EIR did not have to discuss every possible effect of energy use or conservation measure contained in CEQA's Appendix F, which lists numerous energy-conservation measures and their potential impacts.

In a case touching on numerous CEQA aspects, the court also held that the Tracy City Council did not have to return an amended EIR to the Planning Commission for further review; that the city did not have to require the project developer to improve two affected intersections located outside the city limits; and that the city did not have to analyze a smaller store as an alternative.

Still, the court's handling of the energy issue may be of greatest importance to CEQA practitioners.
 
"This is the very first appellate decision to discuss the analysis of energy impacts in an EIR," said Sarah Owsowitz, an attorney with Cox, Castle and Nicholson and who represented WinCo Foods. As the court noted, CEQA requires mitigation measures to reduce "wasteful, inefficient and unnecessary" energy usage (Public Resources Code § 21100, subdivision (b)(3)). But neither the law nor the CEQA Guidelines explains how to determine if energy consumption will be wasteful, inefficient and unnecessary, she said. The court's decision to allow reliance on Title 24 standards provides some guidance.
 
Rick Jarvis, Tracy's attorney, agreed that the court's holding is useful – for the time being. There is ongoing discussion of amending Appendix F to include a more prescriptive approach to energy, he noted.
 
In 2003, owners of two parcels along Interstate 205 in Tracy applied to change the property's designation in the city's general plan and a specific plan from industrial to commercial. While the city was considering the request, WinCo Foods submitted an application for a 95,900-square-foot grocery store on the southern parcel. An EIR addressing the proposed amendments to the plans and the store was prepared. In May 2006, the Tracy Planning Commission approved WinCo's conditional use permit and recommended the City Council certify the project EIR and amend the general and specific plans.
 
A group called Tracy First appealed the permit approval to the City Council. During a public hearing the following month, representatives of the group objected to the EIR and the project. The council directed its staff to revise the EIR to take into account some of the objections.
 
By the time the project and EIR returned to the City Council in April 2007, the city had updated the general plan and rezoned the parcels to commercial. Over Tracy First's objections, the City Council certified the EIR and approved the specific plan amendment and conditional use permit. Tracy First sued. San Joaquin County Superior Court Judge Carter Holly ruled for the city and WinCo.
 
In upholding the Superior Court, the Third District initially published only that portion of its decision concerning process. Specifically, Tracy First had contended that the EIR must be set aside because the City Council did not return the document to the Planning Commission after ordering revisions. The court noted that CEQA Guidelines require an advisory body on zoning and land use – here, the Tracy Planning Commission – to review an EIR "in draft or final form." Because the commission had reviewed the draft EIR in 2006, and because the project did not change, the council was right to go forward with the amended environmental document, the court ruled.
 
"[T]he City Council was not required to remand the matter to the Planning Commission when the city amended the EIR because (1) although the final EIR considered by the City Council in approving the project may have been a different draft, it was not a different EIR, and (2) there is no express requirement that the project application be remanded to the Planning Commission when the city amends the EIR before it is certified by the City Council and used in granting the project application," Scotland wrote.
 
The court published the remainder of its opinion after receiving requests to do so from Tracy, WinCo, the League of California Cities, the City of Sacramento and others. On energy, Tracy First argued that the city violated CEQA because it did not include the northern parcel in its energy consumption calculations, and relied the Title 24 standards to measure potential impacts. The group also argued the city's conclusions on the matter were not supported by substantial evidence, relied on unsupported opinion and omitted a CEQA Appendix F analysis.
 
The court determined that the EIR analyzed energy use on the northern parcel, and though the analysis was less detailed than the one for the proposed WinCo store on the southern parcel, it was acceptable because "no application has been submitted to build" on the northern parcel. The court further ruled that Title 24 standards were appropriate for determining a significant impact and that Tracy First did not prove that the city's conclusions or the expert's opinion lack substantial evidence. As for Appendix F, "[N]either  Appendix F, itself, nor any other authority requires that an EIR discuss every possible energy impact or conservation measure listed in Appendix F."
 
In deciding that the developer did not have to improve two intersections in an unincorporated part of San Joaquin Valley, the court noted that the county did request that the city extract a "fair share" payment from WinCo. But the city declined because the county's transportation program did not include the two intersections. Instead, the city identified the project's effects on them as unavoidable significant impacts and adopted a statement of overriding consideration.

In seeking the mitigation measures, Tracy First argued that under City of Marina v. Board of Trustees of California State University, (2006) 39 Cal.4th 341, WinCo was obligated to address the project's effects outside the city limits. In that ruling, the state Supreme Court said that Cal State University, Monterey Bay, which is located on the former Fort Ord Army base, had to mitigate the effects of campus growth elsewhere on the old base (see CP&DR Legal Digest, September 2006; In Brief, September 15, 2009).

But the Third District noted that the Ford Ord Reuse Authority had a plan for upgrading infrastructure throughout the base. "The county had no similar plan to improve the intersections, either in the near-term or within several years," Scotland wrote. "Because of this, the holding of City of Marina, that ‘a commitment to pay fees without any evidence that mitigation will actually occur is inadequate,' supports the city's conclusion that the mitigation, though needed, was not feasible."

According to WinCo attorney Owsowitz, the court placed an important limitation on the City of Marina decision. "This is significant because a lot of petitioners have been claiming that under City of Marina, you have to mitigate any impacts, anywhere," she said.
 
Jarvis, Tracy's attorney, said the court's reading of City of Marina helps local governments confronted by a project's extraterritorial effects. "This issue comes up time and again for lead agencies," he said.
 
For alternatives, the EIR analyzed four: no project; an industrial development; a larger WinCo store; and the proposed store with a smaller parking lot. Tracy First argued that a smaller store should have been considered too because it could have reduced the project's effects on traffic and air quality. But the group did not demonstrate how the effects would shrink with the store size, said the court.
 
"There is no evidence in the record that fewer customers would patronize the WinCo Foods store if the store were smaller," Scotland wrote. "Thus, we can only speculate that traffic would be lighter. And Tracy First offers only its ‘presumption' that air quality would be improved."
 
The Third District's decision could be instructive for another lawsuit filed by Tracy First, this one regarding the city's approval of a Wal-Mart expansion project. Tracy First has raised many of the same issues in that litigation.
 
The Case:
Tracy First v. City of Tracy, No. C059227, 2009 DJDAR 13866. Filed August 27, 2009. Certified for publication in its entirety September 18, 2009.
The Lawyers:
For Tracy First: Steven Herum, Herum Crabtree, (209) 472-7700.
For the city: Rick Jarvis, Jarvis, Fay & Deporto, (510) 238-1400.
For WinCo Foods: Sarah Owsowitz, Cox, Castle & Nicholson, (415) 392-4200.