By Leslie Z. Walker
According to Las Lomas Land Co., LLC v. City of Los Angeles (Sept. 17, 2009, B213637) ___ Cal.App.4th ___, the long standing rule that CEQA does not apply to projects rejected or disapproved by a public agency, allows a public agency to reject a project before completing or considering the EIR. In Las Lomas, the Court of Appeals for the Second Appellate District made clear that a city may stop environmental review mid-stream and reject a project without awaiting the completion of a final EIR. While this holding may avoid wasting time and money on an EIR for a dead-on-arrival project, it will also make it harder for projects to stay in play until the entire environmental document is complete.
In May of 2002, Las Lomas Land Co., LLC (“Las Lomas”) submitted an environmental assessment form to the City of Santa Clarita (“City”) for the development of a 555-acre site in an area to be annexed into the City’s sphere of influence. The City issued a notice of preparation of an EIR for the project, which included the annexation of the site, approval of a specific plan, zoning and development entitlements. Las Lomas submitted a draft specific plan and preliminary draft environmental studies to the City. One of the City’s council members opposed the project and asked the City to cease its work on it. The City attorney advised the council members that the City was required to continue processing and completing the EIR. Nonetheless, the objecting council member introduced a motion to suspend the environmental review process until the city council made “a policy decision” to resume the process. The city council ultimately approved a modified motion which also called for the City to cease work on the proposed project.
Las Lomas filed a combined petition for writ of mandate and a complaint, alleging, among other arguments: 1) the City had no rational basis to stop processing the project application; 2) the City had a mandatory duty to complete its environmental review before making a decision on the project; 3) the failure to complete the environmental review denied Las Lomas procedural and substantive due process and equal protection; and 4) allowing the objecting council member to substitute a new motion for his original one without notice denied Los Lomas procedural due process rights.
The City demurred, claiming 1) it had rejected the project and therefore had no obligation under CEQA to complete the EIR; 2) the decision against annexation and prezoning was legislative and therefore procedural due process protections did not apply; 3) Las Lomas was not deprived of any constitutionally protected property interest; and 4) the complaint failed to allege any irrational or arbitrary action. The Court granted the demurrer on all grounds and asked Las Lomas, LLC if it would request leave to amend to plead misrepresentation. Las Lomas answered in the negative claiming it did not need to plead promissory estoppel as a separate cause of action.
On Appeal, Las Lomas claimed the City had a mandatory duty under CEQA to complete and consider an EIR before rejecting the project and the complaint adequately alleged denial of substantive and procedural due process. Las Lomas also requested leave to amend to allege promissory estoppel and inverse condemnation.
No Mandatory Duty Under CEQA to Complete an EIR After Rejecting the Project
The Court rejected Las Lomas’ argument that Public Resources Code section 21061 establishes a mandatory duty for a public agency to complete and certify an EIR before approving or rejecting a project. Section 21061 provides in part, “An environmental impact report is an informational document which, when its preparation is required by this division, shall be considered by every public agency prior to its approval or disapproval of a project.” The Court explained “to require a public agency to prepare and circulate a draft EIR, and prepare a final EIR including response to comments, before rejecting a project would impose a substantial burden,” and “would not produce a discernable environmental benefit” or “further the goal of environmental protection.” The Court further explained, “Section 21061 is expressly limited to projects for which an EIR is otherwise required by CEQA, and therefore does not apply to projects rejected by the agency.”
The Court similarly rejected Las Lomas’ argument that CEQA Guidelines section 15270 allows a public agency to reject a project either before initiating environmental review or after completing and certifying the EIR, but nowhere in between. The Court said, “To the contrary, we conclude that if an agency at any time decides not to proceed with a project, CEQA is inapplicable from that time forward.”
Procedural Due Process Does Not Apply
The Court found that the City had not violated Las Lomas’ due process rights because Las Lomas could assert no claim of entitlement to any of the approvals it sought. Citing Castle Rock v. Gonzalez (2005) 545 U.S. 748, 756 the Court explained “a benefit is not a protected property interest under the due process clause if the decision maker has the discretion to grant or deny the benefit.” The Court distinguished the present situation, from the case of Horn v. County of Ventura (1979) 24 Cal.3d 605, a case cited by Las Lomas to support the proposition that the denial of a development application constituted a deprivation of property for the purposes of procedural due process. In Horn however, the Court held that land use decisions that substantially affect the property rights of owners of adjoining parcels may constitute deprivations of property for the purposes of due process.
Under the due process guaranteed under the California Constitution, only property interests or benefits conferred by statute are protected, (Ryan v. California Interscholastic Federation-San Diego Section (2001) 94 Cal.App.4th 1048, 1071) and Las Lomas was unable point to any statutory rights. Further, the Court found Las Lomas had failed to demonstrate it had been deprived a statutorily conferred benefit. Therefore, Las Lomas had not demonstrated a procedural due process violation.
Las Lomas Has Not Adequately Alleged a Substantive Due Process Violation
The Court found that Las Lomas’ allegations did not amount to an outrageous or egregious abuse of power and thus did not amount to substantive due process violations.
Las Lomas Has Not Adequately Alleged and Equal Protection Violation
The Court rejected Las Lomas’ claim that it was a “class of one” whose equal protection had been violated because the petitioners could not show that the city council member’s effort to defeat the proposed project was wholly irrational. In order to establish a “class of one” equal protection claim, a plaintiff must show 1) it was treated differently from other similarly situated persons, 2) the difference in treatment was intentional, and 3) there was no rational basis for the difference in treatment. (Village of Willowbrook v. Olech (2000) 528 U.S. 562, 564 (citations omitted).) A court must reject an equal protection challenge to a government action if there is any reasonably conceivable state of facts that could provide a rational basis for the difference in treatment. The Court could not make such a connection and thus could not find a violation.
Las Lomas Is Not Entitled to Leave to Amend
Finally, the appellate court denied Las Lomas’ request to amend the complaint. The Court invoked the rule that a plaintiff electing not to amend a complaint when a demurrer is granted with leave to amend waives the right to later do so. The Court treated Las Lomas’ negative answer to the trial court’s question as to its intentions with respect to amending, as the trial court granting and the plaintiff waiving, the right to do so.
The moral of the story: don’t ask the appellate court for what the trial court already gave you.
Leslie Z. Walker is an associate at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.