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California Court of Appeal Upholds Supplemental EIR for Lease Amendment Pertaining to Desalination Plant

California Court of Appeal Upholds Supplemental EIR for Lease Amendment Pertaining to Desalination Plant
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By James Purvis

The California State Lands Commission prepared a supplemental Environmental Impact Report (EIR), as a California Environmental Quality Act (CEQA) responsible agency, to a 2010 subsequent EIR that had been prepared by the City of Huntington Beach for a desalination plant, certain components of which would be located offshore. Plaintiffs sued, claiming that the State Lands Commission had failed to assume lead agency status, which resulted in an unlawful piecemealing of the environmental review. The trial court rejected plaintiffs’ claims, who then appealed. The Court of Appeal in turn affirmed. [California Coastkeeper Alliance v. State Lands Commission, ___Cal.App.5th___, Case No. C088922 (3rd Dist. Apr. 8, 2021).]

Factual and Procedural Background

Since 1999, real party in interest Poseidon Resources (Surfside) LLC (Poseidon) has been seeking to establish a desalination plant at a site in Huntington Beach. The site itself consists of approximately 11.78 acres including tide and submerged lands in the Pacific Ocean offshore of Huntington Beach. In 2005, Huntington Beach, serving as the lead agency performing environmental review of the proposal under the California Environmental Quality Act, certified an Environmental Impact Report. In 2006, Huntington Beach granted the project’s conditional use permit and coastal development permit, although the project did not move forward. A few years later, Poseidon submitted a modified application, which was evaluated in a subsequent EIR prepared by Huntington Beach in 2010 as a result of changed circumstances and new information. Huntington Beach certified the subsequent EIR in 2010.

Following additional changes in circumstances, including regulatory changes, Poseidon proposed modifications to certain offshore project components, which it addressed via a lease modification with defendant State Lands Commission. The State Lands Commission, as a CEQA responsible agency, determined that it needed to prepare a supplemental EIR to Huntington Beach’s 2010 subsequent EIR to evaluate the potential impacts associated with the lease modification project. The scope of the supplemental EIR was limited to evaluating the changes to the 2010 lease and the incremental effects of those modifications and was intended to be read in conjunction with the 2010 subsequent EIR. In late 2017, the Lands Commission certified its supplemental EIR.

Plaintiffs filed a petition for a writ of mandate asserting that the State Lands Commission failed to comply with CEQA. Among other things, plaintiffs claimed the State Lands Commission violated CEQA by failing to assume the role of lead agency in undertaking additional CEQA review. They also claimed that, in light of substantial changes to the project, substantial changes to the surrounding circumstances, and new information of substantial importance, the State Lands Commission should have performed a full EIR as lead agency. According to plaintiffs, the manner in which the Commission proceeded led to unlawful segmentation of the environmental review process. The trial court denied the petition and plaintiffs appealed.

The Court of Appeal’s Decision

The Court of Appeal first addressed the State Lands Commission’s decision to proceed with a supplemental EIR, as opposed to a subsequent EIR, finding that substantial evidence supported the Commission’s determination that only minor additions or changes would be required to the previous EIR. The Court of Appeal noted, however, that plaintiffs did not argue that it was an abuse of discretion to proceed by supplemental EIR. Rather, they claimed that the election to prepare a supplemental EIR did not relieve the State Lands Commission of a responsibility to assume the role of lead agency. According to plaintiffs, when the original lead agency has completed its statutory obligations, but project changes or new information require additional review, the next public agency to take discretionary action on the project “shall” step into the role of lead agency. The State Lands Commission’s failure to do so, plaintiffs contended, was a legal error that resulted in the unlawful segmentation of the updated CEQA analysis.

The Court of Appeal rejected this argument, first noting that the CEQA Guidelines only require a responsible agency (such as the State Lands Commission in this case) to assume lead agency status where, among other things, a subsequent EIR is required under CEQA Guidelines section 15162. Because substantial evidence supported the State Lands Commission’s decision to instead prepare a supplemental (rather than a subsequent) EIR, the Commission therefore was not required under the CEQA Guidelines to assume lead agency status. Accordingly, the Court of Appeal concluded, there was no legal error in this respect.

Piecemealing Claim

The Court of Appeal also rejected plaintiffs’ piecemealing claim (“piecemealing” refers to the process of attempting to avoid full environmental review by splitting a project into several smaller projects that appear more innocuous than the total planned project). The Court first noted that the 2010 subsequent EIR prepared by Huntington Beach had never been challenged, and thus was presumed to be legally adequate. Thus, the State Lands Commission only was required to analyze those changes to the project since 2010, as it did.

Upholding the supplemental EIR, the Court of Appeal found that the State Lands Commission undertook the procedures expressly authorized by statute and the CEQA Guidelines that were appropriate under the circumstances. The impetus for the changes was regulatory changes that were not foreseeable in 2010. Under these circumstances, the State Lands Commission did not improperly piecemeal the analysis. As required, it supplemented the previous 2010 subsequent EIR analysis, adding only that information necessary to make the previous EIR adequate for the project as revised in light of the changing regulatory landscape. It was not, the Court of Appeal concluded, required to create a plenary, stand-alone, all-inclusive EIR for the project.

Conclusion and Implications

The case is significant because it contains a substantive discussion of CEQA’s subsequent review provisions, in particular the distinctions between subsequent and supplemental review, as well as a discussion regarding “piecemealing” claims under CEQA. The decision is available online at: