By Cori M. Badgley

The California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) (“CEQA”) provides that the purpose of an environmental impact report (“EIR”) is “to provide public agencies and the public in general with detailed information about the effect which a proposed project is likely to have on the environment.” (Pub. Resources Code, § 21061.) In Center for Biological Diversity v. County of San Bernardino (2010) __ Cal.App.4th __, the court found that an EIR for a proposed open-air composting facility did not satisfy the informational purposes of an EIR in relation to air quality alternatives and water supply.

Nursery Products, the real party in interest, proposed to develop a composting facility on a 160 acre parcel in the Mojave Desert. There were two residences within 3 miles of the site, but otherwise, the closest residence was eight miles away. For its composting materials, the facility would use material derived from human waste and plants. Not surprisingly, the project was very controversial and was challenged on multiple fronts. At the end of the day, the trial court agreed with the petitioners on only two issues: 1) the EIR failed to adequately analyze an enclosed facility alternative that would further mitigate air quality impacts; and 2) the project required a water supply assessment pursuant to Water Code sections 10910 through 10915 and CEQA. Nursery Products appealed.

The crux of petitioners’ argument relating to air quality was that the County of San Bernardino (“county”) rejected an alternative that could feasibly mitigate the air quality impacts of an open air composting facility, namely an enclosed composting facility. The backdrop of petitioners’ argument was a draft EIR that concluded that “even after implementation of feasible mitigation measures, an open-air composting facility would have a significant adverse impact on air quality.” (Id. at 5.) Additionally, although the draft EIR rejected the alternative of an enclosed facility, the draft EIR acknowledged that an enclosed facility “is estimated to reduce VOC and ammonia emissions by 80%.” (Id.)

In spite of the potential reduction in emissions, the EIR found that the enclosed facility alternative was both economically and technologically infeasible. According to the appellate court, the EIR relied exclusively on a memorandum by Geoffrey Swett, an environmental consultant, for its finding of economic infeasibility. The court found the EIR’s reliance on the memorandum ill-founded for several reasons: 1) the memorandum only discussed one example of an enclosed facility and provided no explanation as to why the proposed project would be similar to that example; 2) comments provided by the Department of Health Services pointed to other examples of enclosed facilities that appeared to be working; and 3) the memorandum failed overall to provide facts to support its conclusory assertion that Nursery Products could not get private financing for such an endeavor. Quoting Uphold Our Heritage v. Town of Woodside (2007) 147 Cal.App.4th 587, 599, the appellate court stated: “What is required [for a finding of economic infeasibility] is evidence that additional costs or lost profitability are sufficiently severe as to render it impractical to proceed with the project.” (Id. at 17.) For the reasons stated above, the appellate court found that substantial evidence in the record did not satisfy the definition of economic infeasibility.

As to technological infeasibility, the EIR merely contained a statement that there is no electricity at the proposed site and no electric lines within one mile, and therefore, an enclosed facility is technologically infeasible. According to the court, this evidence did not amount to substantial evidence supporting a finding of technological infeasibility. The EIR should have discussed the cost of bringing electricity to the site, not the fact that there was currently no electricity. Therefore, the court held that the EIR had not adequately shown that the enclosed facility alternative was infeasible, and on remand to the county, the county must fully analyze the alternative.

What the court’s discussion lacks is a connection between the CEQA requirement to discuss a reasonable range of alternatives and the rejection of the enclosed facility alternative. Some of the questions raised from this gap in the analysis are the following: Does the court’s decision imply that a reasonable range of alternatives was not discussed?; If the EIR had not brought up the enclosed facility, would the court still have found the FEIR to be inadequate?; and Should the court’s opinion be interpreted narrowly to only apply in situations where an alternative is discussed but rejected in an EIR as infeasible? These are all questions that practitioners and courts will have to grapple with in the future as this case is used to either support or distinguish other EIR alternatives analyses.

On the issue of water supply, the appellate court rejected Nursery Products’ argument that petitioners failed to exhaust their administrative remedies by failing to raise the specific issue of requiring a water supply assessment under SB 610. The court held that petitioners adequately raised the issue of whether the EIR sufficiently addressed water supply, and there was no need to cite to the specific statute requiring a water supply assessment. Examples cited by the court of the comments raised during the administrative process included the following: “It is never mentioned where the water for the sludge facility is coming from;” the EIR only addressed dust suppression, although water would be needed for fire fighting and sanitation; “a considerable amount of water may be necessary to suppress any potential fires;” and the amount of water the EIR says the project needs seems to be minor in relation to the scope of the project.” None of the comments asserted that a water supply assessment was required. The court found these comments sufficient to exhaust administrative remedies on the issue of whether SB 610 applied.

Addressing the substantive issue of whether a water supply assessment (“WSA”) was necessary, the appellate court held that the composting facility qualified as a “project” under SB 610 (Water Code, § 10910 et seq.), and therefore, a water supply assessment was required. Under section 10912 of the Water Code, a “project” requiring a WSA includes a “proposed industrial, manufacturing, or processing plant, or industrial park … occupying more than 40 acres of land…” The appellate court found that the plain meaning of “processing plant” includes an open-air composting facility because the dictionary definition of “plant” includes “the land, as well as building, machinery and fixtures used in carrying out a trade or industrial business.” ( 25.) Therefore, the proposed composting facility constituted a project under SB 610 and a WSA was required.

After arguing that the composting facility was not a “project,” Nursery Products argued that no WSA was necessary because the composting facility was not connecting to a public water system. Nursery Products relied upon the opinion in Gray v. County of Madera (2008) 167 Cal.App.4th 1099, in which the court stated that a WSA is only required if a public water system is impacted. The appellate court in this case respectfully disagreed with Gray’s interpretation of the statute on the grounds that SB 610 specifically contemplates what occurs if a public water system is not impacted. (See Water Code, § 10910(b) and our previous article disagreeing with Gray entitled “Court Discusses Improper Deferral of CEQA Mitigation and Provides Definition for "Probable Future Projects".”) According to the appellate court, the only inquiry is whether the proposed development constitutes a “project” under section 10912. Because the composting facility was a project, SB 610 applied.

Not only does this decision create a split among the courts of appeal on the issue of whether a public water system impact is required under SB 610, but it also may lead to a broader interpretation of what is defined as a “project,” and therefore, when a WSA is required.

Cori M. Badgley 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.