An appellate court has directed a trial court to set aside all of a project's approval because portions of an environmental impact report were found to be inadequate.

The Fifth District Court of Appeal declined to follow the practice of allowing severance of project approvals unaffected by the California Environmental Quality Act (CEQA) violation. Instead, the court required that the project approval be set aside in its entirely once the CEQA violation was shown.

The disputed project involved land owned by the California State University, Fresno.  The university had leased the property to an associated university foundation, which ground leased the property to developer Kashian Enterprises for a 45-acre mixed-use project adjacent to the school's basketball arena. The CSU Fresno Board of Trustees certified an EIR and approved the project, called Campus Pointe, in 2007.

The owner of a Clovis shopping mall located three miles away filed a lawsuit alleging that the EIR was inadequate and that Trustee Moctesuma Esparza had a conflict of interest because he held a sub-sublease for the cinema portion of the development project. Although Esparza resigned from the board during the project approval process, Fresno County Superior Court Judge Jeffrey Hamilton in 2009 determined a conflict of interest existed and voided the sub-sublease between Kashian and Esparza. Hamilton also concluded that the EIR's analysis of water supply, traffic and parking, and air quality was inadequate. The plaintiff appealed because Hamilton's determination did not halt the entire project.

The first CEQA question for the Fifth District concerned the obligation of the trial court to issue a writ of mandate following the entry of judgment. Hamilton had entered a judgment in favor of the project opponent, but he did not issue a writ, which ordinarily would specify what the Board of Trustees must do to satisfy CEQA. On this procedural issue, the appellate court held that Public Resources Code § 21168.9 makes the issuance of the writ mandatory.

The appellate court's most significant holding, though, has to do with what CEQA practitioners refer to as severance. Under this approach, if the trial court finds that an element of the CEQA document must be redone, the court may sever one portion of the project from the portion tainted by the invalid CEQA and allow the untainted portion to proceed. While many practitioners believe that such an approach is allowed by the California Supreme Court and appellate courts, as well by as the CEQA statute and CEQA Guidelines, the Fifth District disagreed.  

"The statutes and CEQA Guidelines provide for the certification of an EIR when it is complete, and the concept of completeness is not compatible with partial certification. In short, an EIR is either complete or its not," Justice Betty Dawson wrote for the unanimous three-judge panel.

"[T]he trial court's determination that the final EIR was inadequate in certain respects requires an order directing the Board of Trustees to set aside its certification of the final EIR as well as its approval of the project," Dawson wrote.

If this decision remains undisturbed, the issue of severance in CEQA cases will likely have to be resolved by the California Supreme Court.

As for Campus Pointe itself, most of the housing portion has already been constructed. The retail and office components remain unbuilt.

The Case:

LandValue 77, LLC v. Board of Trustees of the California State University, No F058451, 2011 DJDAR 3937, 2011 Cal. App. Unpub. LEXIS 1312. Filed February 23, 2011. Ordered published in part March 16, 2011.

The Lawyers:
For LandValue 77: David Douglas Doyle, Doyle & Schallert, (559) 227-2600.

For the Board of Trustees: Ethan P. Schulman, Crowell & Moring, (415) 986-2800.

For developer Kashian Enterprises: Harriet Steiner, Best, Best & Krieger, (916) 325-4000.