U.S. News & World Report – Best Law Firm:

Abbott & Kindermann is pleased to announce that for 2020, U.S. News and World Report has again identified Abbott & Kindermann, Inc. as a nationally and regionally recognized Best Law Firm; a ranking that the firm has held since 2013.

Abbott & Kindermann, Inc. actively represents private and public clients throughout California, with a particular emphasis over the last 12 months in Alameda, Butte, Calaveras, Colusa, El Dorado, Lake, Napa, Nevada, Placer, Sacramento, Santa Clara, Siskiyou, Sutter, Mariposa, and Yolo counties and cities. Representative matters include:

Advisory Services:

  • Due diligence, entitlements, and real estate services for commercial, industrial, orchard, vineyard, renewable energy, and mining properties;
  • Advise, defend, and settle regulatory compliance matters including the Clean Water Act, Porter-Cologne, air quality, and local zoning;
  • Create and update land use entitlement strategies by evaluating permissible uses on properties throughout the state;
  • Master lease agreement drafting and negotiations for 5G internet implementation;
  • CEQA compliance for new construction and redevelopment projects;
  • Advise and defend AB 1600 Mitigation Fee Act compliance for public agencies and private clients;
  • Expert witness work in land use disputes;
  • Submit client-tailored public comments to statewide programs nearing implementation; and
  • Advise, review, and defend environmental documents and land use entitlements for renewable energy development.

Litigation:

  • CEQA;
  • General Plans and Zoning;
  • Clean Water Act;
  • Easements, implied and express dedications;
  • Covenants, conditions, and restrictions;
  • Failure to disclose in real estate transactions;
  • Land use entitlements;
  • Eminent domain and inverse condemnation;
  • Board of Supervisors or City Council land use approvals;
  • AB 1600 Mitigation Fee Act;
  • Land use construction defect; and
  • California tribal consultation.

Courses Taught:

  • Abbott and Kindermann, Inc. – Annual Conference Series;
  • UC Davis – Annual Land Use Law Update;
  • County Counsel Association – Land Use Law Update;
  • California County Planning Directors Association – CEQA/Land Use Update;
  • League of California Cities – Supreme Court Takings Case and Takings Law Update;
  • National Business Institute – Water Rights and Handling Seminar;
  • UC Davis Extension – Subdivision Map Act class;
  • Abbott and Kindermann, Inc. – Takings & Real Estate Update;
  • UC Davis Extension – Vested Rights, Vesting Maps, and Development Agreements class;
  • American Planning Association, California – Panel on public agency responses to COVID-19;
  • National Business Institute – Best Practices for Handling Winery and Vineyard Land Use Issues;
  • Sacramento County Bar Association – Top 10 Takeaways for Winery and Vineyard Land Use Issues;
  • Sacramento County Bar Association – Supreme Court Takings Case and Takings Litigation Update;
  • Precast Concrete Association – Spring and Fall Annual Conference panels;
  • CalCIMA – Spring and Fall Environmental conference panels;
  • Sacramento County Bar Association – Real Property Section Legal Update; and
  • Halfmoon Bay Education, Inc. – Real Estate, Easements, and Takings Update.

During 2020, state residents and businesses have been navigating through unprecedented fires, landslides, economic downturns, and a once-in-a-century pandemic. Through all of these trials and tribulations, Abbott & Kindermann remains committed to putting our clients first and achieving client desired outcomes as our number one priority. We thank U.S. News and World Report for recognizing our firm during the 2020 ebbs and flows. Most importantly, we thank our clients for continuing to place their trust in us as advocates for their land use problems and creators of their land use solutions.

William Abbott, Diane Kindermann, Glen Hansen, and Daniel Cucchi are attorneys at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

 

Abbott & Kindermann, Inc. is pleased to announce  that  Sacramento Magazine in its August publication has recognized Bill Abbott again as a top attorney in land use for 2020.   Additionally, Bill is recognized as a 2020 Northern California Superlawyer in the field of land use/zoning and land use litigation  (2004-2020), and by Best Lawyers-Northern California (2009-2020) again in the field of land use.

William Abbott is Of Counsel at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

Welcome to Abbott & Kindermann, Inc.’s August Environmental Action News. This summary provides brief updates on recent environmental cases, legislation, and administrative actions in 2020.

1. PREVIOUS MONTH’S UPDATE

To read the July 2020 Environmental Action News- Part 2 post, click here:
https://blog.aklandlaw.com/2020/07/articles/july-environmental-action-news-part-2/

2. SUPREME COURT

There is one case pending at the California Supreme Court. The case and the Court’s summary are as follows:

County of Butte v. Department of Water Resources, S258574. (C071785; 39 Cal.App.5th 708; Yolo County Superior Court; CVCV091258.) Petition for review after the Court of Appeal dismissed an appeal in an action for writ of administrative mandate. This case presents the following issues: (1) To what extent does the Federal Power Act (16 U.S.C. § 791a et seq.) preempt application of the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) when the state is acting on its own behalf and exercising its discretion in deciding to pursue licensing for a hydroelectric dam project? (2) Does the Federal Power Act preempt state court challenges to an environmental impact report prepared under the California Environmental Quality Act in order to comply with the federal water quality certification under the federal Clean Water Act?

3. UPDATE

A. CALIFORNIA WATER RIGHTS AND SUPPLY

1. As The COVID-19 Pandemic Continues, Many Wineries Fear Compliance With New SWRCB Order For Permitting.

In mid-August, the State Water Resources Control Board released an order proposing to modify the statewide winery permitting process for water discharge. The order classified different wineries into regulatory categories holding the wineries to different tiers of compliance based on the reporting requirement in other codified water laws. In response to the order, many wineries submitted public comments reflecting the fear of many wineries and stating that amid pandemic shutdowns of tasting rooms and burgeoning fires throughout the state, wineries will be unlikely to comply with the order. The Board will address public comments submitted and begin the process of finalizing the permitting process over the coming months.

For more information see:
https://www.agalert.com/story/?id=14202

2. Bureau Of Reclamation Opens Public Comment Period For Expansion Of Shasta Dam.

The U.S. Bureau of Reclamation (“Reclamation”) published its Draft Supplemental Environmental Impact Statement in early August, including in its modified proposal, raising the height of Shasta Dam by 3% or 18.5 feet. The proposal looks to raise storage capacity in the critical water basin by 200 billion gallons equating to support for two million people throughout the state each year. The DEIR states that the increased dam height will improve water quality in the Sacramento River and allow for increased breeding grounds for anadromous fish species. Members of the public will have until September 21st to provide comments on the Supplemental DEIR before Reclamation finalizes the environmental

For more information see:
https://mavensnotebook.com/2020/08/06/this-just-in-public-comment-period-open-for-critical-shasta-dam-proposal-to-increase-water-storage-for-californians-and-fish/

3. Stanford Vina Ranch Irrigation Co. v. State of California (2020) 50 Cal.App.5th 976.

An elongated analysis of this critical appellate court decision was published to the Abbott and Kindermann blog earlier this month. Please see attached link to this longer blog article: https://blog.aklandlaw.com/2020/08/articles/ak-news/water-for-the-fishes-the-third-appellate-district-takes-measured-actions-to-protect-threatened-fish-populations/ .

B. WATER QUALITY

1. A Late July Memo From The Department Of Justice Grants States The Power To Enforce Civil Matters Under The Clean Water Act.

The DOJ issued a memo to the chiefs of the Justice Department setting guidance for DOJ divisions to pull back from prosecuting enforcement actions under the Clean Water Act where states are already pursuing CWA enforcement. The guidance attempts to prevent “piling on” enforcement actions since it is a belief of the DOJ that Congress did not craft the CWA with double recovery in mind for claims arising from the same operative facts. DOJ further laid out a set of criteria for enforcement divisions to utilize when determining whether to pursue enforcement actions or not. DOJ will pursue enforcement action if states are not diligently prosecuting civil enforcement actions or the civil assessment of penalties do not comport with the federal statute. The federal government will continue to prosecute all criminal matters under the statute.

For more information see:
https://www.eenews.net/assets/2020/07/27/document_gw_03.pdf

2. San Diego Regional Water Quality Control Board Issues An NPDES Permit To Add Purified Water To The Miramar Reservoir.

The City of San Diego (“City”) was issued an NPDES permit by the San Diego Regional Water Quality Control Board (“Board”) as part of Phase 1 of the City’s Pure Water San Diego Program. The permit would allow the City to add purified water to the Miramar Reservoir and allow the existing Miramar Reservoir to become a complete water system allowing for reuse of the water supply and reduce ocean discharge. As part of Phase 1 of the project, the City must construct a series of facilities and pipelines to clean recycled water and produce 30 million gallons of purified water per day. The project is the first of its kind in the state and was recognized by the Governor as a high-profile program with potential long term solutions to California’s water shortage problem.

For more information see:
https://www.wwdmag.com/pure-water-san-diego-program-achieves-milestone

3. Santa Ana Regional Water Quality Control Board Supports Permitting The Huntington Beach Desalinization Project As Private Organizations Threaten Lawsuits.

In late July, Santa Ana Regional Water Quality Control Board (“Board”) recommended approval for the proposed Huntington Beach Desalinization Project and directed staff to issue the permit for the project on July 30, 2020. The project known as Poseidon, proposed to preserve, enhance, and restore 1,500-acres of Bolsa Chica Wetlands. The project was further approved conditionally based on Poseidon’s commitment to offset 100% of the direct and indirect GHG emissions resulting from operations. Critics of the project expressed concern over the effects large volumes of processed salt will have on the surrounding ecosystem. Further, many pointed out that the Poseidon project has yet to secure a single contract from purchasers for the treated water. Critics pointed out that the Board was required to consider whether a need existed for the plant as one of the factors for approval and failed to do so.

For more information see:
https://voiceofoc.kindful.com/?campaign=288930
https://www.latimes.com/environment/story/2020-08-06/poseidons-huntington-beach-desalination-plant-still-in-choppy-waters

C. RENEWABLE ENERGY

1. Two Bay Area CCAs Issue A Joint Request To Procure Roughly 1 Million MWh Of Renewable Power Annually For Operations.

San Jose Clean Energy and Peninsula Clean Energy issued a request for proposals to electrical energy providers throughout the state with an aim to sign power purchase agreements (“PPAs”) for at least 10 years. The CCAs plan to procure enough renewable energy from PPAs to power 200,000 homes per year from new renewable energy or renewable energy-plus battery storage. The entities jointly provide energy to 1.7 million people in San Jose and San Mateo County and currently procured 45% of all energy supply from renewable energy sources. Although both entities have plans to procure 100% renewable energy supply within the next 10 years, each entity has a different approach to reaching these target goals. The joint PPAs entered by both entities will bring the CCAs that much closer to their 100% supply goal. Renewable energy generators have until September 4, 2020 to submit proposed PPAs.

For more information see:
https://renewablesnow.com/news/california-ccas-eye-ppas-for-1-twh-of-renewable-power-708734/?utm_campaign=REU&utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz-_RAF4Ywafa6MwsRtVMcahC71PreuQa1SxBUNx1bdXJsAtACQtcEEp5VIBGRCCTvNKN92Ua

2. Breaking Ground: Why Municipalities And Landowners Should Pay Attention To California’s Renewable Portfolio Standard And The 2030 Benchmark.

An elongated analysis of this critical renewable energy subject was published to the Abbott and Kindermann blog earlier this month. Please see attached link to this longer blog article: https://blog.aklandlaw.com/2020/08/articles/ak-news/breaking-ground-why-municipalities-and-landowners-should-pay-attention-to-californias-renewable-portfolio-standard-and-the-2030-benchmark/

D. HAZARDOUS MATERIALS AND REMEDIATION

1. California et al. v. Bernhardt, 2020 U.S. District LEXIS 128961 (N.D. Cal. July 15, 2020).

The U.S. District Court granted summary judgment to citizen suit plaintiffs over the federal government’s failure to comply with the Mineral Leasing Act, the Administrative Procedures Act (“APA”), and the National Environmental Policy Act (“NEPA”) when redefining “waste.” California and numerous other citizen suit plaintiffs contested the Bureau of Land Management’s (“BLM”) modifications to the Mineral Leasing Act alleging that the agency failed to consider scientific findings when modifying the definition of “waste.” In its opinion, the Court describes BLM’s history of modifying the waste definition over a span of three years without providing proper scientific evidence to support modifying the rules implementing the Mineral Leasing Act. The Court stated that core to the litigation is BLM’s arbitrary and capricious modifications of the rule without following proper protocols through the APA. The Court further stated that the decision of the BLM failed to take a “hard look” at the science to support modifying the rule under NEPA. The Court stated that the “BLM could not act in a vacuum. It was required to provide a reasoned explanation for its abrupt reversal as to the findings in the Waste Prevention Rule and to comply with its obligations under NEPA.” The Court granted summary judgment for Plaintiffs and instructed BLM to provide the Court with a detailed report outlining how it will bring the rule into compliance with updates every thirty and sixty days thereafter.

2. California River Water v. City of Vacaville, 2020 U.S. Dist. LEXIS 127562 (E.D. Cal. July 20, 2020).

On cross motions for summary judgment for the presence of hexavalent chromium in the public water supply, the Court granted relief to the City of Vacaville. Under the Court’s reasoning, while it cannot deny that hexavalent chromium exists and presents a risk to human health, plaintiffs overstretched the Resource Recovery and Conservation Act (“RCRA”) statute in order to attach liability to the City. The Court agreed with the City and held that hexavalent chromium is not a “solid waste” under RCRA. The Court further stated that attempting to determine whether the waste was hazardous to human health regardless of whether it is a solid waste under RCRA would be unnecessary, confusing, and advisory since Plaintiffs cause of action was limited to RCRA claims. The Court reiterates that it is not stating that hexavalent chromium does not pose a threat to Vacaville residents; rather, that plaintiffs brought their claims against the City under the wrong statute to attribute liability. The Court further ordered the case closed without further proceeding.

E. NATIONAL ENVIRONMENTAL POLICY ACT (“NEPA”)

1. CEQ Finalizes Rule Codifying Modifications To NEPA.

In January 2020, The Council on Environmental Quality (“CEQ”) issued a notice of proposed rulemaking with extensive changes to the National Environmental Policy Act (“NEPA”). The changes include a new timeline for NEPA review, increased coordination between stakeholders and relevant agencies, and redefining the scope of NEPA. Comments on the proposed rulemaking were accepted until March 10, 2020. Significant changes to the act include: 1) redefining what constitutes a “major federal action” initiating NEPA review; 2) minimizing the range of alternatives a project needs to consider before deciding on the most technically and economically feasible option; 3) limiting identification of effects of a project to only direct effects on the environment from a project (Note: This has the potential to exclude all climate change analysis); 4) provides vague guidance in defining mitigation as part of a complete mitigation plan; 5) adds page limits to environmental assessments and environmental impact statements; 6) shortens the timeframe for NEPA review from project implementation to approval; and 7) provides a series of exemptions for projects non-federal in nature or covered by other statutes, among other things. The finalized rule also codified a series of documents including judicial interpretations, presidential directives, guidance documents, and non-active legislation. On July 16, 2020, CEQ codified the finalized rule and the new rule will apply to all projects commencing after September 14, 2020.

For more information see:
https://www.environmentallawandpolicy.com/2020/07/ceq-final-rule-overhauls-nepa-regulations/#:~:text=On%20July%2016%2C%202020%2C%20the%20Council%20on%20Environmental,introducing%20important%20changes%20to%20the%2040-year-old%20review%20process
https://www.whitehouse.gov/ceq/nepa-modernization/
https://www.lexology.com/library/detail.aspx?g=31c9dab3-87fb-4a83-8abd-4bdd7bcd7468
https://www.natlawreview.com/article/trump-administration-proposes-sweeping-reforms-to-national-environmental-policy-act
https://www.natlawreview.com/article/trump-administration-proposes-unprecedented-and-comprehensive-revisions-to-nepa
https://www.natlawreview.com/article/revisions-to-nepa-proposed-to-unlock-american-investment

F. FOREST RESOURCES

1. Mt. Cmtys. for Fire Safety v. Elliott, 2020 U.S. Dist. LEXIS 91593 (C.D. Cal. May 26, 2020).

Plaintiffs filed suit against the U.S. Forest Service (“USFS”) for violations of NEPA and the National Forest Management Act (“NFMA”) resulting from USFS approving the Cuddy Forest Health and Fuels Reduction Project which removes trees from Mt. Pinos Place in the Los Padres National Forest. The parties filed cross motions for summary judgment. The Court held that USFS’s use of categorical exemptions under NEPA were appropriate and were not arbitrary or capricious. The Court granted summary judgment on the NEPA claim in favor of USFS, holding that Plaintiffs failed to prove that the NEPA determination by USFS was arbitrary and capricious. Plaintiffs further alleged that USFS failed to consider the aesthetic management and desired conditions for the Los Padres Forest Plan. The Court held that since the actions of the USFS was not arbitrary or capricious as to the NEPA claims, the actions of the USFS were not arbitrary or capricious as to the NFMA claims. As such, the Court dismissed the NFMA claims as moot. The Court granted USFS’s motion for summary judgment in full and denied plaintiffs’ motion for summary judgment in full.

G. STREAMBED ALTERATION AGREEMENTS

1. California Department Of Fish And Wildlife Inform Public Of Need To Notify Agency If Cannabis Cultivation Affects Lakes And Streambeds.

In late July, California Department of Fish and Wildlife (“CDFW”) held a webinar informing members of the public how they intended to implement the State’s cannabis cultivation permitting requirements. As part of the permitting process, CDFW introduced the tools the department uses to ensure that cannabis permitting comports with the Lake and Streambed Alteration (“LSA”) Program. Under the Program, all entities must notify CDFW before conducting activity which would materially alter the natural flow of a river, stream, lake, or body of water (perennial, ephemeral, or intermittent) within the state. CDFW noted that an LSA Agreement may not be required to obtain a cannabis cultivation permit, but the notice to CDFW will drive whether the agency believes entities need to obtain an LSA Agreement prior to project commencement. Applicants for LSA Agreements can utilize CDFW’s new permitting tool online and receive approval in as little as 72 hours or work with CDFW staff directly for more complex permitting applications.

For more information see:
https://www.thedesertreview.com/news/cannabis-cultivation-and-land-protection-requirements/article_2dd3bfaa-d52d-11ea-bef5-fb6f682bc9bc.html

H. ENVIRONMENTAL ENFORCEMENT

1. Crystal Geyser Pays $5 Million In Criminal Penalties For Illegal Storage Of Arsenic Waste.

A U.S. District Court Judge ordered Crystal Geyser to implement a compliance plan within 90 days, pay criminal fines totaling $5 million, and remain on probation for three years because of the corporations illegal storage and transportation of hazardous waste generated from filtering arsenic out of spring water. The DOJ brought two counts of criminal liability against Crystal Geyser and the district court imposed $2.5 million in criminal fines for each count. Crystal Geyser discharged contaminated wastewater into a manmade arsenic pond in Inyo County for a period of 15 years without following any environmental health and safety laws. California’s Department of Toxic Substances Control tested the pond in 2015 and determined that it contained nearly five time the federal limit for arsenic leading to the federal criminal charges brought against Crystal Geyser. The company has 90 days from July 29, 2020, to set forth a plan to bring the pond into compliance and 120 days to implement said plan.

For more information see:
https://www.justice.gov/usao-cdca/pr/crystal-geyser-water-bottler-ordered-pay-5-million-criminal-fine-illegal-storage

William Abbott, Diane Kindermann, Glen Hansen, and Daniel Cucchi are attorneys at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

Martis Camp Community Association v. County of Placer, 2020 Cal.App. LEXIS 773 (August 17, 2020).

Petitioners challenged the County’s decision to abandon a roadway connecting two residential subdivisions, the Martis Camp project (“Martis Camp”) and the Retreat at NorthStar project (“Retreat”), near Lake Tahoe in eastern Placer County on several claims, including the California Environmental Quality Act (“CEQA”). The road was originally intended to serve as access for emergency vehicles and transit and was described as such in both EIRs for the two projects.  Over time the road was frequently used by Martis Camp residents as a convenient shortcut to the NorthStar Village area through Retreat. To comply with CEQA, the County relied on an addendum to a previously certified environmental impact report for Martis Camp (“Martis Camp EIR”). The petitioners argued that the County: (1) use of an addendum to the Martis Camp EIR was improper; (2) used the wrong baseline to evaluate the impacts of the abandonment; and (3) failed to prepare a subsequent or supplemental EIR. The trial court denied the CEQA petition, and petitioners appealed.

The appellate court reversed. The County argued the Martis Camp EIR was the most appropriate document to rely on because the effects of the abandonment would be focused on changed traffic patterns of residents at Martis Camp and would not impact the Retreat residents. The Court agreed with petitioners that the County’s reliance on the Martis Camp EIR was improper because the abandonment of the roadway was not a modification of the Martis Camp project. It noted that an addendum is only proper to consider proposed changes to a previously approved project and EIR. Applying this standard, the Court reasoned that since there were no subsequent discretionary approvals needed to modify the Martis Camp project, the subsequent review procedures in CEQA Guidelines section 15162 were not applicable to the Martis Camp EIR. The Court further noted that the roadway was actually proposed and analyzed in the Retreat EIR and held that the County failed to evaluate whether the abandonment would require major revisions to the Retreat EIR. As a result, the Court concluded that the County abused its discretion in finding that no subsequent or supplemental EIR is required because the County relied on the wrong EIR to make that finding. As for the improper baseline claim, the Court remanded the issue to allow for the County to make its own determination of whether or not the existing use of the roadway by Martis Camp residents is a “changed circumstance” from the Retreat EIR and determine the proper CEQA review process in light of the decision. For more discussion on the road abandonment claims, see the August Real Estate Action News.

Daniel Cucchi is Senior Associate at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

Space is still available for Glen Hansen’s virtual brownbag webinar on Thursday, August 27, 2020, titled, “Knick v. Scott: Substantial Changes Coming In Municipal Takings Litigation.” The seminar is hosted by the League of California Cities and will take place from 2:00-3:30pm. Registration closes on Wednesday, August 26. Do not miss out on this informative and impactful webinar!

Webinar Description:

In June 2019, the U.S. Supreme Court in Knick v. Township of Scott, Pennsylvania, overruled the 34-year-old precedent in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). Under Williamson County, an owner whose property had been taken by a local government had not suffered a violation of his Fifth Amendment rights—and thus could not bring a takings claim in federal court—until a state court had denied his or her claim for just compensation under state law. Knick changed all of that. Claimants may now go to federal court without first pursuing a state court takings action.

This webinar will explore the procedural changes brought about by the Knick decision and discuss the potential ramifications of the decision for California cities, which may be substantial.

League Members have priority registration, and the cost is $50.

Non-League Members may register, and the cost is $150.

REGISTER: www.cacities.org/events by August 26

For questions, please contact Megan Dunn at mdunn@cacities.org

For further information or questions please contact, Alison Leary at aleary@cacities.org. Do not hesitate to reach out to Glen Hansen with any questions as well.

Glen’s blog article on the Knick case is located here: https://blog.aklandlaw.com/2019/10/articles/local-government/whistling-past-ms-knicks-graveyard-the-unstated-but-possible-consequences-of-the-u-s-supreme-courts-takings-decision-in-knick-v-township-of-scott-pennsylvania/

We look forward to this virtual meet and greet!

Glen Hansen is senior counsel at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

Welcome to Abbott & Kindermann, Inc.’s August Real Estate Law Action News. This summary provides brief updates on recent environmental cases, legislation, and administrative actions in 2020. The case names of the newest decisions start with Section 3 and are denoted by bold italic fonts.

  1. PREVIOUS MONTH’S UPDATE

To read the July 2020 Environmental Action News post, click here: https://blog.aklandlaw.com/2020/07/articles/ak-news/july-monthly-real-estate-law-action-news/ .

  1. CASES PENDING AT THE CALIFORNIA SUPREME COURT

There are no cases pending at the California Supreme Court at this time.

  1. UPDATE

A. TAKINGS

  1. Weiss v. People ex rel. Dept. of Transportation (2020) 9 Cal.5th 840.

The California Supreme Court denied defendants’ request to apply the laws and procedures governing Eminent Domain law into inverse condemnation claims. The defendants recognized that their defenses were grounded purely in inapplicable eminent domain laws, but asked that the Court apply eminent domain law and process to inverse condemnation because the Court has discretion to interpret and apply borrowed procedures from other bodies of law in other circumstances. Defendants argued that a similar approach could apply here, because the Legislature allowed the judicial branch to develop the application of inverse condemnation actions to various statutes and rules. The Court was unconvinced and held that the eminent domain statutes do not apply in inverse condemnation cases. It reasoned that the eminent domain statutes were narrowly construed by the Legislature and tailored specially to only eminent domain actions. It further reasoned that eminent domain has a particular set of statutory procedures that are inapplicable in inverse condemnation actions. The Court, thus, concluded that the adoption and amendment of statewide rules governing inverse condemnation statutes should be left to the Legislature or Judicial Council.  As such, it affirmed the judgment of the Court of Appeal and denied defendants’ request to import eminent domain statutory authority into inverse condemnation procedure.

  1. Bridge Aina Le’a, LLC v. State Land Use Comm’n (9th Cir. 2020) 950 F.3d 610.

In 2011, the State of Hawaii’s Land Use Commission reverted 1,060 acres on the Big Island of Hawaii from a conditional urban land use classification to the prior agricultural use classification. Plaintiff Bridge Aina Le’a, LLC, a landowner at the time of reversion, challenged the reversion’s legality and constitutionality in a state agency appeal, later filing suit in federal district court. After the trial, the jury decided that there was an unconstitutional regulatory taking of the plaintiff’s property pursuant to Lucas and Penn Central. The district court entered a judgment for the plaintiff, awarded $1 million in nominal damages, and denied the State’s renewed motion for judgment as a matter of law (“JMOL”). The state appealed the denial of the JMOL.

The Ninth Circuit held that the district court erred in denying the State’s renewed JMOL because plaintiff’s evidence did not establish a taking under Lucas or Penn Central. The conditions for the Lucas test were not met because the land retained substantial residual value in its agricultural use classification which still allowed the plaintiff to use the land in economically beneficial ways. The Court concluded that the State was entitled to judgment as a matter of law under Lucas.

Applying the Penn Central factors, the Court concluded that the jury could not reasonably find for the plaintiff. The Court held that the valuation evidence weighed strongly against a taking pursuant to the first factor which considers the extent of the economic loss suffered by the landowner as a result of the action, usually measured by diminution in market value, and rejected the plaintiff’s assertion that the disruption of a land sales agreement showed economic impact. The Commission’s reversion order did not interfere with the plaintiff’s reasonable investment backed expectations at the time of acquisition because the plaintiff had committed to build 385 housing units and had failed to complete them. Hawaii law expressly authorized the Commission to impose this condition. The Court held that plaintiff’s own evidence established a diminution in value that was too small, and the reversion did not interfere with the plaintiff’s reasonable investment-backed expectations for the land. The Court then reversed the district court’s denial of the State’s renewed JMOL motion on the Penn Central test as well.

  1. Ruiz v. County of San Diego (2020) 47 Cal.App.5th 504.

The Court of Appeal reversed the trial court’s determination that a homeowner could claim redress by inverse condemnation against a county if their private drainage system allowed for flow of public water. The Court of Appeal considered whether privately owned drainage on private property allows for homeowner remedies by inverse condemnation if the water in the private pipeline is for public use. Plaintiff/Appellee Ruiz (“Ruiz”), claimed that because the developer offered the County of San Diego (“County”) a dedicated easement to allow for public drainage in 1959 and the County turned down the easement, Ruiz could recover for water damage as a result in the pipeline leaking on Ruiz’s property. Ruiz claimed that the County’s use of the drainage system as part of the Valley drainage system constituted an acceptance of the drainage easement offered in 1959. The Court of Appeal, citing Locklin v. City of Lafayette, 7Cal.4th 327 (1994),  held that the County’s use of the Ruiz pipe did not meet the requirements for inverse condemnation since the County needed to exert minimal control and maintenance over the watercourse near the Ruiz property since the County would be liable for damage caused by streamflow. The Court of Appeal found Ruiz’s arguments unpersuasive since the County did not control continually nor own any portion of the private pipeline. The Court stated the Ruiz lacked substantial evidence to prove that the County had taken their private property for a public use. The Court reversed the award of attorney’s fees to Ruiz and held that each party should bear their own attorney’s fees on appeal.

B. GENERAL REAL ESTATE

  1. Constellation-F, LLC v. World Trading 23, Inc. (2020) 45 Cal.App.5th 22.

A commercial lease set rent to increase 150 percent if the tenant stayed past a certain date. The date passed but the tenant refused to pay the increased rent. Plaintiffs, a commercial landlord (“Constellation”), filed a breach of contract action against defendants  corporations (“World Trading” and “World Tech Toys”) seeking damages for past due rent, late fees, interest, failure to maintain and repair, costs for not being able to use the premises, and holdover rent. Constellation alleged that World Tech Toys was an alter ego of World Trading. The trial court rejected the theory of alter ego liability and held the defendants liable for all damages except the holdover rent, finding it to be an unenforceable penalty. World Trading and World Tech Toys were held liable to Constellation and its successors for $27.196.74. Constellation appealed and defendants cross appealed.

The Court of Appeal reversed the judgement denying Constellation holdover rent.  The court held that the holdover rent was not an unlawful penalty.  The court affirmed the remainder of the judgment, including the trial rejection of alter ego liability. The Court of Appeal explained that holdover rent, or “a graduated rental provision”, in commercial provisions are enforceable even if the increased rent is much greater than the base. To qualify as an unenforceable penalty, defendants must prove that the provision amounted to an illegal liquidation of damages. Here, the defendants failed to show that Constellation had market power to set the rate, and the defendants could have easily avoided higher rent by leaving the premise. Therefore, the trial court should have enforced the holdover agreement.

Further, the defendants argued that the penalty could be avoided under section 1671 of the Civil Code.  However, the Court of Appeal held that section 1671 was inapplicable because the case did not involve a question of penalty or liquidated damages. While the evidence showed unity of interest and ownership, which is required to invoke the alter ego doctrine, there was insufficient evidence to prove that treating defendants as separate entities would promote injustice. The court dismissed the defendant’s cross-appeal and appeal from the order after judgement.

The dissenting Justice argued that the liquidated damages provision, which established the holdover rent at 150 percent of base rent, was an unenforceable penalty. The Dissent argued that the majority’s new test allows contracting parties to bypass tethering a liquidated damages provision to estimated anticipated loss, and instead requires a challenger to analyze each contracting party’s respective market power and persuade a court that there was enough of an imbalance between parties to invalidate the damages provision.

  1. Matson v. S.B.S. Trust Deed Network (2020) 46 Cal.App.5th 33.

Plaintiffs Matthew Matson and Matson SDRE Group, LLC (“Matson”) contested the deed of trust purchased in a foreclosure auction after learning the lien was second in position with a lower fair market value than the auction price. Matson’s complaint alleged that the terms of sale were unconscionable, and they relied on a mistake of fact when purchasing the deed of trust. The trial court granted summary judgment to defendants, S.B.S. Trust Deed Network (“SBS”) stating that there was no irregularity, unfairness, or fraud during the acquisition. The trial court further reasoned that a judicial remedy was not appropriate where plaintiff failed to read through a title report to discover the value and position in the chain of title. Plaintiffs appealed.  The Court of Appeal affirmed.

The court reasoned that plaintiffs were not entitled to relief because there was no unilateral mistake allowing for a remedy since plaintiffs bore the risk of their mistake not to fully read the title report. The transaction was complete when plaintiffs accepted the final bid at auction and there was no legal effect of rejecting the title after plaintiffs learned the deed of trust was second in priority to another deed. For this reason, the court held that plaintiffs failed to produce evidence to warrant judicial remedy by rescission. Also, the court reasoned that because plaintiffs were aware of the risks, they bared through the complete title report, they were not entitled to relief.

  1. Jeppson v. Ley (2020) 44 Cal.App.5th 845.

Among one of the more colorful neighbor disputes in 2020, the Court of Appeal affirmed the trial court’s decision to deny redress to Appellant, Jeppson, since there was no issue of “public interest” involved in a neighborhood feud where appellant’s cat was killed by appellee’s dog. The Court evaluated whether Jeppson’s claims arose from protected activity and then measured the likelihood of success on each claim as part of Jeppson’s summary judgment motion. A protective activity would grant relief to plaintiff in connection with an issue within the public interest. § 425.16, subd. (e)(3). The Court evaluated six criteria outlined in Rand Resources, LLC v. City of Carson (2019) 6.Cal.5th 610; Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913; Weinberg v. Feisel (2003) 110 Cal.App.4th 1122; Workman v. Colichman (2019) 33 Cal.App.5th 1039; Abuemeira v. Stephens (2016) 246 Cal.App.4th 1291; FilmOn.com Inc. v. DoubleVerify Inc. (2019) 7 Cal.5th 133, to determine if the Jeppson’s claims were in fact within the “public interest.” The criteria were as follows:

  • Statements or conduct concerning a person or entity in the public eye,
  • Conduct that could directly affect a large number of people,
  • A topic of widespread public interest,
  • Whether the issues affect only those directly involved,
  • Gathering ammunition for a private controversy, and
  • Where issues are too remotely connected to the public conversation to assert the issue within the public interest.

The Court reasoned that the claims at issue between Jeppson and Ley did not meet the criteria outlined in any of the above categories, thus the Jeppson claims did not constituted issues of public interest. The Court stated, “Feuds can metastasize into the Hatfields and McCoys or the Montagues and Capulets. This tiff, though bitter, remained strictly local: a private affair and not a matter of “public interest.” The Court affirmed the trial court’s ruling in favor of Lay and awarded costs on appeal to Jeppson.

  1. Kelly v. House (2020) 2020 Cal.App. LEXIS 277 (April 1, 2020), certified for partial publication.

The Court of Appeal awarded statutory attorney’s fees to Appellant for the trespass and conversion on to Appellant’s agricultural property because the damaged land resulted in loss of organic certification status and prevention of prospective buyers. Plaintiffs, the Houses, appealed the decision of the trial court on their claims for attorney’s fees against the Fosses for trespass and conversion of their property. The Court of Appeal considered whether the Fosses entering the Houses property and spraying pesticide jeopardized the fragile organic farming certification held by the Houses and whether such claims gave rise to an award of attorney’s fees for both claims. Statute Section 1021.9 provides: “In any action to recover damages to personal or real property resulting from trespassing on lands either under cultivation or intended or used for the raising of livestock, the prevailing plaintiff shall be entitled to reasonable attorney’s fees in addition to other costs, and in addition to any liability for damages imposed by law.” The Court held that the Houses could recover attorney’s fees under the statute because the statute was intended to protect farmers from illegal trespasses to their land. Defendant claimed that the Houses could not recover under Section 1021.9 for attorney’s fees because the majority of their fees related back claims other than the trespass claims. The Court remanded the case to the trial court to determine the amount of reasonableness of the Houses attorney’s fees under Section 1021.9 as it relates to the trespass claim only.

C. COMMON INTEREST DEVELOPMENTS

  1. Coley v. Eskaton, 2020 Cal.App. LEXIS 629 (June 11, 2020), certified for partial publication.

The trial court held that (i) directors of a homeowners association breached their fiduciary duties when they apportioned costs while acting under a conflict of interest, precluding the use of the best business judgement rule, and (ii) that the directors were not liable in their personal capacities.  The Court of Appeal affirmed in part, reversed in part, and remanded. Since the directors did not engage in transactions with the association, the common law standard of inherent fairness was more appropriate than the statutory standard of a just and reasonable transaction. However, requiring the directors to show that the transaction was just and reasonable was not an error because this standard closely resembles the common-law standard. It also held that the trial court erred by not finding the directors liable in their personal capacities because they breached their fiduciary duties by apportioning costs and expenses which were inconsistent with their governing duties and resulted in damages.

2. Aldea Dos Vientos v. CalAtlantic Group, Inc. (2020) 44 Cal.App.5th 1073.

In a construction defect case before the Court of Appeal, the Court reversed the trial court’s confirmation of the arbitrator’s award for a condominium association (‘association”). The Court of Appeal concluded that the association’s governing documents require a majority vote of members to bind arbitration, and that the arbitrator failed to obtain a vote of the association constituting an “unreasonable servitude” under the statute. As the Court reasoned, the arbitrator’s award violated the plain language of the statute. The Court reversed the trial court’s decision and awarded costs to the appellant.

D. REAL ESTATE CONTRACTS & TRANSACTIONS

  1. Harris v. University Village Thousand Oaks, CCRC, LLC (2020) 49 Cal.App.5th 847.

The Court of Appeal reversed a trial court decision stating that residents of a continuing care retirement community were protected under the continuing care contracts entered into by the retirement community. Residents of a retirement community appealed an arbitrator’s award denying statutory protections to elders. Defendant argued that the basic protections did not apply to the residents since the award was made in arbitration and not in litigation. The Court of Appeal reversed, holding that the plain language of Civil Code sections 1940 and 1953 applies to all continuing care contracts regardless of the stage in litigation or related court proceedings. As the Court stated, because residents paid fees to be protected by the terms of their living agreement the residents were entitled to receive the benefits of the fully executed residential contract.

The Court acknowledged that although retirement community contracts have fundamental differences from a standard residential unit contract, the protections received under both types of contract are no different. The Court reasoned that when fees are paid to confer benefits to all residents and as long as an exchange of money occurs allowing for benefits to be conferred to tenants, then the facility is obligated to honor those benefits under the landlord’s duty of care. Lastly, the Court held that the “the legislative purposes of both the landlord-tenant laws and the continuing care contract laws are best served by applying the arbitration prohibition to the housing component of continuing care contracts.” The Court remanded the case to the trial court with instructions.

  1. Moore v. Teed (2020) 48 Cal.App.5th 280.

The Court of Appeal affirmed the holding of the trial court for allowing “benefit-of-the-bargain” damages to plaintiff for all detrimental actions taken by defendant resulting from plaintiffs botched remodel. Plaintiff (“Moore”) brought suit against defendant (“Teed”) when Teed advised Moore to purchase a $4.8 million home in San Francisco with significant structural and foundation issues. Teed further agreed to act as the intermediary between the contractors restoring the home and directed Moore to pay him directly rather than the contractors. The home repairs were not made properly, and Moore paid Teed a significant amount of money before ultimately filing a complaint against Teed. At trial, an expert witness testified that the home repairs would have cost $4.477 million with at least $620,000 to be spent, specifically on the foundation. A jury found for Moore stating that Teed had fraudulently induced Moore into purchasing and restoring the home while falsely claiming repairs would only amount to $900,000. The jury granted a damages award of $2,144,434 plus $104,498 in “benefit-of-the-bargain” damages. Teed conceded to the claims against him for fraudulent inducement but appealed on the “benefit-of-the-bargain” damages.

The Court of Appeal held first that the trial court did not err in instructing the jury to award alternative damages to Moore since false misrepresentation allowed for multiple means of recovery. The Court stated, “a ‘broader’ measure of damages may be awarded than simply ‘out-of-pocket’ losses.” Second, the Court held that the “benefit-of-the-bargain” damages could be awarded in real property transactions. As the Court held, a person who was defrauded out of the financial benefit of real property can collect broader damages including “benefit-of-the-bargain” damages. Third, The Court held that the damages award was not speculative because tort damages fully compensate an injured party and the jury would have determined the same jury award regardless of using “benefit-of the-bargain” as a measure for damages. Fourth, the Court pointed out that the award was not duplicative because the jury issued a jury award significantly lower than the $3,842,160 requested by Moore. The Court affirmed the ruling of the trial court and awarded attorney fees on appeal to Moore.

  1. Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337.

On appeal, the Court of Appeal reversed the lower court’s denial of Appellant, Jaman Properties 8 LLC (“Jaman”), moving papers for arbitration under the Federal Arbitration Act (“FAA”). Victrola 89, LLC (“Victrola”) brought suit Jaman in superior court alleging undisclosed and unrepaired defects in a real property transaction. Under the real estate purchase agreement between parties, Jaman moved for arbitration under the Federal Arbitration, which the trial court denied finding that the California Arbitration Act (“CAA”) controls arbitration between the parties. The Court held that the FAA preempts procedural provisions otherwise controlled by the CAA if the purchase agreement between the parties incorporates FAA on its face. The real estate purchase agreement between the parties on its face specified that the FAA would control. The Court held that Victrola’s piecemeal arguments of which sections of the CAA should control and which of the FAA should control in arbitration were unpersuasive. The Court reasoned that the lack of specificity in the contract for which claims should be arbitrated under the CAA and under the FAA is immaterial since the FAA controls over all claims by federal preemption. Lastly, the Court held that Victrola must arbitrate its claims under the FAA unless Jaman is estopped by the trial court from doing so. The Court overturned the trial court’s decision and remanded the case back to the trial court to determine whether Jaman is estopped from arbitration under the FAA.

E. EASEMENTS, ADVERSE POSSESSION, DEDICATIONS, & BOUNDARY DISPUTES

  1. Martis Camp Community Association v. County of Placer, 2020 Cal.App.LEXIS 773 (August 17, 2020).

The Court of Appeal held that the County’s decision to abandon a road while reserving rights to easements on other sections of that road was reasonable, since the road itself was unnecessary and merely a residential convenience rather than a necessity. Defendant, the County of Placer partially abandoned a public easement right for a road connecting two subdivisions. The road’s intended use was supposed to be as an emergency services road and closed off to private use. However, sometime around 2010, residents in the two subdivisions began privately using the access road leading county officials to request the County Board of Supervisors to abandon the public rights to use and retain rights to use for emergency and transit services. Plaintiffs argued that the trial court erred in denying that the County had a right to abandon a public road. Other causes of action included violations of the Brown Act, violations of CEQA when deciding to abandon the road easement, and the trial court improperly sustaining a demurrer on an inverse condemnation claim.

The Court of Appeal affirmed the trial court’s determination that the County did not violate the statutory requirement for abandoning a public road. The Court agreed with the Board of Supervisor’s determination that the road was never intended to be used as part of the public transportation network. The Court held that the actions of the County were reasonable and supported by substantial evidence because use of the road by the public was convenient but also unauthorized since the road was not planned, designed, or approved to accommodate use in the public road system. Plaintiffs further acknowledged that the County had the right to abandon the road, but that it could only abandon the road in full or approve it for complete use, not reserve some right of access to the road. The Court dismissed this argument, holding that Plaintiffs failed to point to any authority supporting their argument and the Court could not find any case law stating that the County had to abandon the entire road without reserving some easement rights. The Court further held that the County did not violate the Brown Act and dismissed the inverse condemnation claim by plaintiffs. Lastly, the Court held that plaintiffs were entitled to relief on the CEQA claims and remanded the case with instructions to order the issuance of a writ of mandate and require proper compliance with CEQA.

  1. Gamerberg v. 3000 E. 11th St., LLC (2020) 44 Cal.App.5th 424.

The Court of Appeal reversed a trial court ruling holding that irrevocable licenses tied to a 1950 parking affidavit do not survive transfers of the property to different owners without notice. The dispute between parties arose when it became unclear who had a right to eight parking spaces on lot between two commercial business owners. Plaintiff, Gamerberg, filed a complaint in the trial court alleging that he held an irrevocable license over eight spaces in the lot based on a 1950 parking affidavit grandfathering his use of the spaces between owners. The Court examined whether the 1950 affidavit created an irrevocable license binding on subsequent purchasers who had no notice of the affidavit. The Court determined that the lack of recordation of the 1950 affidavit meant that the document did not bind subsequent purchasers who had no actual notice of the provisions in the document. Since the prior owners failed to record the parking affidavit, binding subsequent purchasers to the affidavit was irrelevant. The Court reversed the trial court’s ruling and awarded costs to 3000 E. 11st St., LLC.

  1. Madani v. Rabinowitz (2020) 45 Cal.App.5th 602.

In a suit based on claims of trespass and negligence when defendant, Rabinowitz, erected a fence on plaintiff, Madani’s, property and continually parked inoperable cars in Madani’s property, the Court of Appeal affirmed that the fence and parked cars were continuing encroachments. The Court held that since the fence and parked cars were a continuing encroachment that the statute of limitations did not apply, and the Court could review the case subject to independent review of the facts. The Court agreed with the lower court that costs to move the fence were not sufficient to warrant leaving the fence as a permanent structure. The Court noted that Rabinowitz replaced the fence in 2015 and could move the fence for a modest cost. The Court further held that Madani could not recover costs because they did not present sufficient evidence to justify a damages award. The Court reasoned that the trial court granted injunctive relief, and that was sufficient to deny an award of monetary damages. The Court affirmed the trial court’s ruling and ruled both parties shall split costs.

William Abbott, Diane Kindermann, Glen Hansen, and Daniel Cucchi are attorneys at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

By Daniel S. Cucchi and Kristen Kortick

https://www.cpuc.ca.gov/rps/

Although cities and counties in California face health and safety shutdowns from the pandemic, utilities must continue essential services and remain in compliance with pre-existing laws. One of those laws is California’s Renewable Portfolio Standard (“RPS”) which is driving utilities to transition energy mixes to state approved renewable resources in compliance with achievement benchmarks set each year. Setting aside pandemics, election years, and the numerous other issues facing the state, California utilities reported compliance with the 2020 benchmark to the California Public Utility Commission (“CPUC”) on August 1, 2020 and provided broad outlines for achievement of long-term contracts to meet the 2030 compliance deadline. Utilities have until the end of 2020 to ensure long-term contracts are finalized. Movement in the utility sector rarely overlaps with land use law, but the mandate to bring 30% more renewable energy online in ten years could dramatically impact land use management in 2020 and thereafter. As long-term procurement contracts and benchmarks for RPS compliance deadlines approach, renewable land use development has the potential to intersect with problems related to permitting, local infrastructure and planning, and CEQA compliance. Given the scale necessary to achieve the state’s lofty goals, local agencies could play a key role in the development of renewable energy projects throughout California.

California’s Complex RPS History:

California’s RPS is a guiding document that investor-owned utilities, small electrical generators, and community choice aggregators must follow in order to comply with California’s renewable energy mandate enacted by the Legislature in 2002 and last modified in 2018. Currently, California utilities must meet 33% renewable energy by 2020. California met the 33% renewable generation goal two years early prompting the Legislature to modify renewable targets on an accelerated schedule for all future procurement deadlines. In 2015, the state codified SB 350 which requires: (i) utilities to procure 50% of all energy generation from carbon neutral sources, and (ii) 65% of all electrical generation to come from long-term energy contracts of 10 years or more. In 2018, California further mandated utilities to procure 60% of all energy generation from carbon neutral sources by 2030. During each round of modifications to the RPS over the past decade, several utilities and energy generation stakeholders expressed concerns about the difficulties in meeting future renewable energy benchmarks without fluctuations in pricing to the ratepayers or a near complete restructuring of resource procurement. Historically, utilities have not requested rate adjustments and cited RPS compliance as the justification since the RPS’s inception.

A 2016 U.C. Berkeley study estimated that between 2002 and 2015, California saw an increase of 11,234 MW of new RPS compliant energy facilities feeding California utilities energy procurement mix. In 2016, Forbes reported that roughly 60% of its Fortune 500 companies committed to procuring renewable energy for corporate operations coinciding with California’s RPS benchmarks. As of 2018, the California Energy Commission (“CEC”) reported that approximately 33% of electrical energy procurement in the state came from renewable energy development. For renewable energy developers, this indicates that while developments continue to bring more supply, demand grows with the push for clean energy from the RPS and private sector commitments to “green the supply chain.” Likely, private sector energy procurement will come from offsite power producers since it is unlikely that commercial and industrial operations could support an adjacent solar or wind farm in metropolitan Los Angeles or San Francisco. This further suggests that local agencies are likely to see more applications for renewable energy development in areas surrounding commercial and industrial epicenters.

While California utilities remain on target to meet the 2030 compliance deadline, utilities have recognized that doing so requires further technological advances such as large-scale battery storage facilities, additional transmission development, and more capacity to accept renewable energy sources. In 2018, California needed 194,842 Gigawatt Hours to achieve Total System Electric Generation.

The Race For Compliance In 2020 And Beyond!

As previously stated, the utilities must meet the mandate of procuring 33% renewable energy by the end of 2020 and energy compliance reports for the 2020 calendar year were filed by August 1, 2020. As part of RPS compliance, utilities can purchase renewable energy credits (“REC”) from any provider in the Western Electricity Coordinating Council (“WECC”) service area (the area spans from California up to Washington state, east to Montana, and south to New Mexico). The CPUC and CEC measure whether or not a utility is complying with its current renewable energy procurement requirement by cross checking the amount of overall energy demand projected by the utility in a calendar year and the total number of RECs purchased by the utility. If the percentage of RECs to overall energy use is within the mandated target, then the utility has complied with the RPS.

One mystery surrounding renewable energy procurement is whether utilities sign majority procurement contracts with in-state renewable energy developers or out-of-state renewable energy developers. When the RPS was developed, many in-state procurement providers voiced serious concerns about opening up REC credits to all energy providers in the WECC because of the competitive advantage afforded to out-of-state service providers (i.e. no CEQA hurdles, lower land values, less encroachment from urban and suburban development, etc.). However, transmission planning for out-of-state procurement has not scaled up at the same level as in-state energy development. More specifically, the transmission line capacity in-state provides utilities several different routes to transport energy locally where there is capacity to accept newly generated energy and service utilities during peak and off-peak hours.

Although several transmission development corporations have committed to long-range transmission lines from states all over the WECC region, those goals are still just that, goals. Long-range transmission lines spanning several thousand miles require permitting, approvals, and complete development across multiple states as well as approval for incoming transmission into California by the CEC and CPUC. While out-of-state transmission may aid California in the deadline to bring 100% renewable energy onboard by 2045, it is unlikely to support the development race by 2030. In-state developers have the capacity to build-out shorter sections of transmission lines even with CEQA hurdles in a shorter time frame. By 2030, the race for transmission building has the potential to largely be won at the local level since local grid building demystifies the complexity of connecting transmission across numerous jurisdictions.

Post COVID-19 Infrastructure Boom?

As the CEC reported in May 2020, overall statewide energy consumption has decreased since the stay-at-home order was issued by Governor Newsom. Residential energy consumption increased from 8.9 to 12.4%, but overall, there is a decrease in industrial and commercial energy demand. Further, in coordination with the California Department of Public Health (“CDPH”), the CEC issued an order in April 2020 making solar voltaic and energy storage installers essential workers citing the need to keep consistent energy on the grid to support the health pandemic.

With utilities needing to bring another 27% renewable energy online in ten years, renewable energy investments could see a post-pandemic expansion. Between 2008 and 2012, twelve states expanded controls of each RPS. Further, Congress enacted several loan guarantees, subsidies, and cash grant programs. Of those programs, Section 1603 of the American Recovery and Reinvestment Act specifically created direct payment in lieu of federal tax incentives programs: the investment tax credit (“ITC”) and the production tax credit (“PTC”). By 2012, 21 GW of wind energy and 9 GW of solar energy development benefitted from the ITC and PTC. These programs remain active grants with a sunset by the end of 2020. However, in a rare directive, the U.S. Treasury in May 2020 gave extensions to qualifying ITC and PTC energy providers who intend to bring new energy online by October 2020, but whose projects have been delayed due to the pandemic. Absent federal intervention, the bottom line remains that California utilities are mandated to bring 60 percent renewables online in the next ten years.

Further, at the federal level, industry and voters are looking to 2020 presidential race to gauge the future of federal involvement in renewable development following the 2020 election cycle. Although federal implementation of clean burning energy could boost California’s energy goals, federal support under a new administration would be a windfall to preexisting implementation of state and private enterprise plans.

Renewable Development and Local Governments:

Over the years, California’s lawmakers have continued to seek new ways of streamlining the development of in-state renewable energy. For example, Assembly Bill 2188, enacted in 2014, requires local governments to streamline permitting of residential rooftop solar projects in order to encourage statewide compliance with the RPS at the local level. More recently, at the 2020 Abbott & Kindermann, Inc., annual conference, we noted that Governor Newsom was planning to pause a new state law requiring solar on all new home construction. In February 2020, the State reversed the Governor’s solar freeze and finalized its rule with modifications. Under the finalized rule, most new construction is still required to include solar, but not all. Municipalities across the state are also redeveloping government offices as small-scale electrical providers such as the City of Los Angeles and City of San Diego. Further, cities across California, such as San Francisco, are also implementing a city-based RPS and committing to 100% carbon neutral energy generation.

Renewable energy development requirements and policies such as these could put pressure on local governments to pass ordinances supporting these efforts, but in order to achieve the state’s aggressive RPS goals, moderate to community-scale energy development projects are likely to become the norm. Depending on the size and intensity of the project, the local agency’s consideration of these permits is likely to trigger environmental review. CEQA offers a few exemptions that could be applicable to renewable energy projects, most of which are used to support a limited amount of development in existing developed locations and are not specific to energy development (e.g., Existing Facilities, Infill, etc.). Absent local agency streamlined approval processes, many, if not most projects will not benefit from those exemptions. For instance, community-scale solar projects similar to the SMUD SolarShares program allowing for 150 MW of concentrated solar, likely will require full CEQA review.

Conclusion:

Bottom line, California’s RPS has so far avoided the consequences of federal swings in renewable energy growth policies and that is unlikely to change in the coming years. Regardless of where utilities decide to contract to procure their renewable sources, many of the long-term utility contracts signed in 2020 will aid in the achievement of the 2030 RPS compliance benchmark. As the State transitions from the 2020 benchmark into the 2030 benchmark, government at all levels should anticipate potentially significant increases in land use development for renewable energy generation.

Daniel S. Cucchi is a senior associate and Kristen Kortick is a law clerk at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

 

Glen Hansen will present a virtual brownbag webinar on Thursday, August 27, 2020, titled, “Knick v. Scott: Substantial Changes Coming In Municipal Takings Litigation.” The seminar is hosted by the League of California Cities and will take place from 2:00-3:30pm.

Webinar Description:

In June 2019, the U.S. Supreme Court in Knick v. Township of Scott, Pennsylvania, overruled the 34-year-old precedent in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). Under Williamson County, an owner whose property had been taken by a local government had not suffered a violation of his Fifth Amendment rights—and thus could not bring a takings claim in federal court—until a state court had denied his or her claim for just compensation under state law. Knick changed all of that. Claimants may now go to federal court without first pursuing a state court takings action.

This webinar will explore the procedural changes brought about by the Knick decision and discuss the potential ramifications of the decision for California cities, which may be substantial.

League Members have priority registration, and the cost is $50.

Non-League Members may register, and the cost is $150.

REGISTER: www.cacities.org/events by August 26

For questions, please contact Megan Dunn at mdunn@cacities.org

For further information or questions please contact, Alison Leary at aleary@cacities.org. Do not hesitate to reach out to Glen Hansen with any questions as well.

Glen’s blog article on the Knick case is located here: https://blog.aklandlaw.com/2019/10/articles/local-government/whistling-past-ms-knicks-graveyard-the-unstated-but-possible-consequences-of-the-u-s-supreme-courts-takings-decision-in-knick-v-township-of-scott-pennsylvania/

 We look forward to this virtual meet and greet!

 Glen Hansen is senior counsel at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

By Diane Kindermann and Jessica Melms

Stanford Vina Ranch Irrigation Co. v. State of California (2020) 50 Cal.App.5th 976

On June 18, 2020, the Third Appellate District upheld the State Water Resources Control Board’s (“SWRCB”) authority to curtail unreasonable use of pre-1914 appropriative and riparian water rights through emergency regulations. Historically, post-1914 appropriative rights were afforded less protection in shortages compared to riparian and pre-1914 water rights. On top of these principles, the reasonable use doctrine limits the right to use all water rights enjoyed or asserted in the state only to the extent that “reasonably required for beneficial use to be served.”

The spring-run Chinook salmon and steelhead trout are both threatened fish under the California and federal Endangered Species Acts (“CESA” and “ESA”, respectively). Each year, some of these anadromous fish species journey from the ocean to Deer Creek within the Lassen National Forest. The California Department of Fish and Wildlife (“CDFW”) identifies the creek as a high priority stream, and during years of drought or low water flow, water diversions can prevent adult salmon and trout from reaching spawning habitat. Two irrigation companies, Stanford Vina Ranch Irrigation and Deer Creek Irrigation, divert water for agricultural use from Deer Creek. By virtue of a judicial decree entered in 1923, Stanford Vina is entitled to roughly 66 percent of Deer Creek’s flow based on its senior riparian and pre-1914 water rights.

In May 2014, during the peak of one of California’s most severe droughts, Governor Brown declared a state of emergency. In response, SWRCB began the process of promulgating emergency regulations implementing in-stream flow requirements for Deer Creek and two other creeks. SWRCB adopted the emergency regulations, providing that continued diversions would threaten to cause flows to dip beneath the drought emergency minimum flow requirements, and therefore constituted a waste and unreasonable use under Article X, section 2 of the California Constitution. Diversions were labeled unreasonable per se, and SWRCB was authorized to issue curtailment orders without a noticed hearing to ensure adequate water supply for the threatened species. Both irrigation companies were subjected to four total curtailment orders and were banned from diverting water from Deer Creek for several years.

Stanford Vina Ranch sued the SWRCB challenging its discretion in the issuance and implementation of certain temporary emergency regulations in 2014 and 2015 and claiming that the orders violated due process requirements and amounted to a taking without just compensation. Specifically, Stanford Vina asserted causes of action for inverse condemnation and declaratory relief, claiming that the curtailment order and emergency regulations amounted to a taking of their vested water rights for public “fishery enhancement purposes” without just compensation. Additionally, Stanford Vina sought writs of mandate and injunctive relief ordering SWRCB to rescind the regulations and curtailment orders, and to refrain from adopting further orders without first complying with statutory and constitutional requirements of due process and reasonable compensation. The trial court bifurcated the condemnation and declaratory relief causes of action and upheld SWRCB’s adoption of the emergency regulations limiting water diversions to protect fish migration. Stanford Vina appealed.

The Court of Appeal affirmed, holding that SWRCB acted within its broad authority to prevent unreasonable use of water under Article X, section 2 of the California Constitution. SWRCB’s enabling statute “grants it the power to ‘exercise the adjudicatory and regulatory functions of the state in the field of water resources’ and in that role, the Board is granted ‘any powers that may be necessary or convenient for the exercise of these duties.’” Specifically, SWRCB has the authority to take all appropriate actions to prevent waste, unreasonable use, or unreasonable method of diversion of water in California. The Court held that fish survival is an appropriate consideration in determining what is or is not an “unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in the state.”

Stanford Vina argued that the requirement for a hearing stemmed from the federal and California Constitutions. However, even though the “determination of reasonableness would necessarily have been determined ad hoc, adjudicatively, this does not mean due process requires the Board to hold an evidentiary hearing before engaging in promulgating a regulation.” Consistent with this constitutional provision, the Legislature may enact per se rules of unreasonable use without a hearing. Therefore, the Court held that SWRCB did not act arbitrarily, capriciously, or contrary to procedure, and it was not required to hold an evidentiary hearing.

Additionally, the curtailment orders were valid because substantial evidence supported findings that the diversions would have violated the regulations, and senior water rights holders are not exempt. Stanford Vina did not challenge the sufficiency of the evidence supporting SWRCB’s conclusion. Nor could they point to any purported errors relating to the issuance of the curtailment orders themselves. Lastly, the takings claim failed because Stanford Vina did not possess a vested right to divert water from Deer Creek in contravention of the emergency regulations.

Diane Kindermann is a shareholder and Jessica Melms is a law clerk at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.

Golden Door Properties, LLC v. Superior Court, 2020 Cal. App. LEXIS 710

In Golden Door Properties, LLC v. Superior Court, the Fourth Appellate District addressed several key issues involving the scope of a CEQA record of proceedings, including the question of what is the obligation of a lead agency to retain emails, and possibly even internal notes and other non-electronic documentation, which are otherwise routinely deleted or discarded pursuant to agency policy or common practice.

The litigation backdrop to this decision is equivalent to the United States involvement in Afghanistan: It is a conflict with no apparent ending in sight. The petitioner (“Golden Door”) is a resort property located in San Diego County that vigorously opposed the potential development of nearby property. This conflict generated Golden Door litigation against the water district, a Public Records Act (“PRA”) lawsuit against the County, and a separate CEQA lawsuit against the County following project approval. The combined litigation involved extensive discovery disputes in the trial court, multiple writs filed with the Court of Appeal and one to the California Supreme Court. The general plan amendment, which was part of the project approval, was the subject of a referendum and was defeated by the voters.

The heart of this most recent decision involved the consequences of the County’s policy of routinely deleting emails after 60 days. This issue presented itself in both the PRA litigation and the CEQA challenge to the project approval. Petitioner elected to prepare the record of proceedings in the CEQA challenge but was provided only a limited number of emails. The County advised the petitioners of its policy providing for automatic deletion of emails after 60 days, a practice then challenged by the petitioners. The appellate decision is lengthy at 50-plus pages and provides an extensive discussion of the various discovery disputes (involving not only the County, but the EIR consultants as well) and the litigation. The key holdings¹ can be distilled down to the following:

1. The County’s policy of routinely deleting emails conflicted with CEQA’s definition of the record of proceedings (Public Resources Code §21167.6). Although CEQA contains no express requirement that emails be retained, the Court relied on Section 21167.6, subdivision (e)(7) (“All written evidence or correspondence submitted to, or transferred from, the respondent public agency with respect to compliance with this division or with respect to the project”), to conclude that the lead agency was obligated to retain emails as official records.

2. The trial court utilized a discovery referee who ultimately sided with the County on many of the discovery disputes. The referee erroneously considered the petitioners’ demands for documents as requests for extra record evidence and this formed a basis for the referee ruling for the County. In fact, the petitioners’ discovery efforts concerning emails and other materials was a dispute over obtaining a complete record of proceedings and should not have been viewed as extra record evidence as was considered in Western States Petroleum Association v. Superior Court (1995) 9 Cal.4th 559.

3. The County violated its own policy on record retention. In interpreting the County code, the appellate court concluded that because CEQA considers emails as documents to be retained, these emails became records required by law to be kept under the County’s own record retention rules.

4. The Civil Discovery Act applies in CEQA cases. [Note: This opens the door for petitioners to subpoena relevant documents from the lead agency, other agencies, and agency consultants. To the extent that the applicant has communicated with agencies, those communications may be relevant to the CEQA litigation and may be subject to subpoena.]

5. The cost of email retention is immaterial. The County argued that it would cost $76,000 per month to store the emails. While the appellate court noted the cost, it did not alter the court’s position as to the obligation of the agency to preserve emails. The court noted that emails not relevant to the project or with the agency’s compliance with CEQA could be deleted. [Note: This puts the lead agency in the unenviable and unworkable position of screening the content of every email before deleting, risking an accidental deletion. In these authors’ assessment, the agency would be better off to save all emails than to spend the time, money, and risk of parsing out some emails.]

6. In its efforts to create the record of proceedings, the petitioners could subpoena the business records of the consultants hired by the County in an effort to recreate the emails and documents deleted by the County.

7. Because of the ongoing multiple cases filed against the project, the developer and County could enter into an agreement permitting confidential document exchange through respective legal counsel. Absent that fact pattern, the appellate court concurred in the decision of Citizens for Ceres v. Superior Court (2013) 217 Cal.App.4th 889, holding that there is no legal basis during application processing for a common interest exemption from disclosure.

8. The referee improperly upheld the non-disclosure of 1,900 documents based upon the preliminary draft exemption and the deliberative process exemption. While that might have been an appropriate basis to not disclose, the record before the referee was insufficient. The privilege log must contain “reasonably specific detail.” The County’s supporting declaration lacked sufficient information and was too broadly framed to support the non-disclosure. [Note: The court did not directly address other non-email documents such as staff notes, sticky notes, or even fax confirmations, some of which may benefit from these exemptions. It did, however, affirm a broad principle that only documents “that do not provide insight into the project or the agency’s CEQA compliance with respect to the project” can be discarded. This raises the prospect that these other types of written documents could also come under the same scrutiny and suggests it could be prudent to hold on to these documents as well, at least until the record has been agreed to by the parties and certified.]

Commentary: The practical effect of this decision is to make CEQA processing and litigation more difficult and expensive for all concerned. For major projects we can look forward to the time and expense of locating, vetting, and indexing even more documents never to be cited in any brief or legal argument, hardly a value-added exercise. Unfortunately, as the court notes in its holding, the consequences for failing to secure these records can be substantial, as the court has the power to rule in favor of petitioners and vacate project approvals for that reason alone. It is worth noting that this is not a problem caused by the courts, but the failure of the Legislature to provide meaningful bookends to CEQA litigation.


¹The appellate opinion includes a number of other email/CEQA/PRA rulings. This blog highlights the rulings that have the broadest potential application.

William Abbott is Of Counsel and Daniel Cucchi is Senior Associate at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.