Since 1970, the City of San Diego (the “City”) has gradually converted its overhead, wooden-pole utility systems to an underground system. Due to funding constraints, the City adopted a Utilities Undergrounding Program Master Plan (“Master Plan”) (2017) to manage selection and prioritization of underground projects. The portions of the City with overhead utility lines were designated as “blocks.” The City Council approved project allocation to select blocks annually and the City staff would then conduct environmental review for each block. Thereafter, the City Council would create Underground Utility Districts for the year’s selected blocks. Residents were mailed a notice to attend the hearings, and after approval of the district, the City would begin designing the projects. Project construction involved installing transformers every 8 to 14 homes, which were roughly three feet cubed and placed on 4’ by 4’ concrete pads.

McCann (the “Appellant”) filed a petition for writ of mandate challenging the City’s approval of two sets of underground projects: (1) projects the City determined were exempt from CEQA (the “Exempt Projects”) and (2) projects for which the City adopted a mitigated negative declaration (the “MND Projects”). Appellant asserted that the above-ground transformer boxes required for the projects significantly impacted the environment, and, thus, the City was required to prepare an environmental impact report (“EIR”) for both sets of projects. The trial court denied Appellant’s petition, finding Appellant failed to exhaust administrative remedies for the Exempt Projects and failed to demonstrate that substantial evidence supported a fair argument that the MND Projects may have a significant impact on the environment. McCann appealed, and the Court of Appeal affirmed all but one of the trial court’s findings.

Appellant Did Not Exhaust Her Administrative Remedies For The Exempt Projects And Failed To Establish Any Lawful Excuse For Failing To Exhaust Administrative Remedies.

The exhaustion doctrine bars the pursuit of judicial remedy where an individual has failed to exhaust available administrative remedies. Under CEQA, if a non-elected official determines a project is exempt, the agency must allow for an appeal to the agency’s elected decision-making body. (Public Resources Code § 21151, subd. (c).) The local lead agency is permitted to establish procedures governing such appeals. (CEQA Guidelines § 15061(e).) Here, the City Municipal Code provided that a person must file an application to appeal an environmental determination not made by the City Council, including a CEQA exemption, within 10 business days of the determination. (City of San Diego Municipal Code Ch. 11 § 112. 0520(b) (2000).) Appellant conceded that she did not file an administrative appeal but argued that: (1) the Notice of the Right to Appeal the exemption determination violated constitutional due process principles; and (2) the City’s procedures failed to comply with CEQA’s requirements by improperly bifurcating the environmental determination process.

First, citing Horn v. County of Ventura (1979) 24 Cal.3d 605 (“Horn”), Appellant challenged compliance with due process principles after the City posted the Notice of Right to Appeal on the City’s website and sent e-mails to City Council members and local planning groups, arguing that the process failed to reasonably notify all potentially impacted homeowners. The Appellate Court rejected this claim, noting that in Horn the California Supreme Court held that Constitutional rights to notice and hearing apply to land use decisions which substantially affect the property rights of owners of adjacent parcels, not agency decisions having only de minimus effect on land. Thus, as applied to the facts here, it found that the City did not fail to comply with due process principles because: (1) as stated in Horn, a CEQA exemption decision is not a land use determination; and (2) Appellant failed to demonstrate that she was deprived of a significant property interest by having transformer boxes in the public right of way and short periods of construction activity, because Appellant had primarily complained of short-lived impacts associated with construction activities.

Second, the Court of Appeal found that the City satisfied CEQA’s requirements by comporting with general notice requirements that the Legislature deemed sufficient for other CEQA determinations and, thus, provided adequate notice. It reasoned that because the CEQA Guidelines permit a public agency to delegate certain CEQA functions to staff, including exemption determinations (CEQA Guidelines § 15022, subd. (a)(9)), the City was permitted to allow staff to make the exemption determination despite the requirement that the City Council approve the projects themselves. Thus, the Court of Appeal found that the City did not improperly bifurcate the environmental determination process.

The MND Projects Were Not Improperly Segmented, Were Accurately Described, And Did Not Significantly Impact Aesthetics, But Were Not Analyzed for Consistency With The CAP.

First, Appellant alleged that the City violated CEQA by segmenting the projects rather than considering the projects as one citywide underground utility project. The Appellate Court rejected the claim, reasoning that the MND Projects are independent projects that do not rely on other undergrounding projects to operate. Thus, it found that the City did not violate CEQA by improperly segmenting the MND Projects.

Second, Appellant argued that the City improperly deferred its decision on the precise locations of the transformer boxes to a later design phase of the project. Relying on the reasoning in Save Round Valley Alliance v. County of Inyo (2007) 157 Cal.App.4th 1437, which held that an agency is not required to provide extensive detail in its project description beyond what is necessary for review of the environmental impact, the Court found the City need not identify the specific locations for the Projects, because the environmental impacts of the project were the same regardless of the transformers’ precise location.

Third, Appellant asserted that substantial evidence supported a fair argument that the MND Projects would have significant impacts on aesthetics. Appellant relied on one public comment made by a single speaker, as well as her own remarks, to assert that the three-foot transformers placed next to the street in a developed neighborhood would lead to a potentially significant aesthetic impact. The Court of Appeal rejected the claims, reasoning that Appellant’s testimony focused on asserted aesthetic impacts within her own neighborhood, which was included in the Exempt Projects, not the MND Projects, and the testimony from another commenter was too vague and amounted to nothing more than an “expression of concern.” Thus, it held that Appellant failed to identify substantial evidence in the record to support a fair argument of a potentially significant aesthetic impact from the MND Projects.

Finally, the Court of Appeal evaluated whether the trial court’s finding that the City adequately determined that the MND Projects would not have significant greenhouse gas (“GHG”) emissions impact was supported by substantial evidence. Here, in conjunction with the City’s 2015 CAP, the City prepared a Climate Action Plan Consistency Checklist (“Checklist”) pursuant to CEQA Guidelines § 15183.5 (authorizing agencies to adopt a CEQA tiering process that relies on a significance analysis in an adopted Climate Action Plan), which among other things determined whether a project was consistent with the applicable strategies and actions of the CAP. The Court noted, however, that the consistency analysis applied to projects that required a certificate of occupancy, which the MND Projects did not need. As a result, the Court held that the City erred in using the Checklist to determine the MND Projects’ consistency with the CAP, because the Checklist lacked a step to assess whether infrastructure projects were consistent with specific GHG reduction measures included in the CAP. Thus, the Court reversed the trial court’s decision, concluding that the City’s determination that the MND Projects’ did not have a significant impact on GHG emissions was not supported by substantial evidence.

Daniel Cucchi is a Senior Associate and Mariah Ponce 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.