California Supreme Court Upholds Use of “Common Sense” Exemption, Says That CEQA May Require Consideration of the Effects of “Displaced Development”

Muzzy Ranch Co. v. Solano County Airport Land Use Commission (2007) __ Cal. __

By Arthur J. Friedman, David P. Lanferman and Elizabeth S. Anderson

In Muzzy Ranch Co. v. Solano County Airport Land Use Commission, the California Supreme Court unanimously held that the adoption of the Travis Air Force Base Land Use Plan (the "Plan") by the Solano County Airport Land Use Commission (the "Commission") was a "project" for purposes of CEQA.In this particular case, however, the Court affirmed the Commission’s determination that the adoption of the Plan was exempt from CEQA pursuant to the "common sense" exemption since the Plan simply reiterated existing Solano County General Plan land use policies.This decision is significant in that the Court: (1) upheld the use of the "common sense" exemption from CEQA review, even though "legitimate questions were raised" about the possible environmental impacts of the adoption of the Plan and the Commission had erred by failing to identify substantial evidence in the record in support of its invocation of the exemption; and (2) also acknowledged that CEQA may require lead agencies to consider the effects of "displaced development" resulting from restrictive land use policies where such development can be reasonably anticipated.

The Commission adopted the Plan in 2002.The Plan sets forth land use policies to guide future development in the vicinity of Travis Air Force Base to ensure that development is consistent with aircraft activity at the Base.The Commission filed a Notice of Exemption stating that its adoption of the Plan was exempt from CEQA since the action created no possibility of a significant effect on the environment.(Public Resources Code section 15061(b)(3).) Muzzy Ranch Co., owner of more than 1,000 acres within the Plan area, filed a petition for writ of mandate and a complaint for declaratory relief claiming: (1) the Commission erred in finding that its adoption of the Plan was not subject to CEQA; and (2) the Commission violated CEQA by failing to examine the potential environmental effects of adopting the Plan before filing the Notice of Exemption.The trial court denied the petition and entered judgment for the Commission.The Court of Appeal reversed.

Regarding whether the adoption of the Plan was a "project" subject to CEQA, the Commission argued that it had no responsibility under CEQA to consider "displaced development" that the Plan might create due to its restrictions on residential development because such displaced development is speculative. The Commission argued further that the Plan was only advisory to the jurisdictions it impacted so adoption of the Plan could not be the legal cause of any environmental effects.

The Supreme Court rejected both arguments.The Court explained that the availability of housing was of vital statewide importance and that no state locality was "immune from the legal and practical necessity to expand housing due to increasing population measures."As such, a government agency may reasonably anticipate that its ban on development in one area may displace development to another area.Displaced development that can be reasonably anticipated may require CEQA analysis.Further, the fact that additional governmental agencies must make further land use decisions before the Plan’s actual environmental effects can be determined does not automatically mean that the Commission’s adoption of the Plan is not a project for purposes of CEQA.

With respect to whether the project was exempt from CEQA, the Commission argued that its adoption of the Plan fell within the "common sense" exemption of the CEQA Guidelines, which applies where "it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment."(CEQA Guidelines section 15061(b)(3).)The Court noted, however, that the Commission’s intention with respect to its Notice of Exemption was unclear.The Notice assumed that the Commission’s adoption of the Plan was a "project" for CEQA purposes, but exempt from CEQA.The Commission, however, failed to cite evidence in support of its conclusion, and also argued that, as a matter of law, adoption of the Plan was not a project subject to CEQA.

Nevertheless, the Court extricated the Commission from its own errors and found there was substantial evidence in the record demonstrating that the Commission had adequately analyzed the possible environmental effects of the project in making its decision.The Supreme Court noted that the level of CEQA analysis required in any particular case depends on a many factors, including the nature of the project, the directness or indirectness of the contemplated impact, the ability to forecast the actual effects the project will have on the physical environment, whether future effects will themselves require analysis under CEQA, and whether the effects will be felt outside of the project area.Further, the CEQA Guidelines provide for streamlined review of projects that are consistent with existing general plans and zoning.The Supreme Court found that since the Plan simply reiterates existing land use regulations (established in the Solano County General Plan and Zoning Code), its only real effect is to make it more difficult for local agencies to change their policies in the future to permit increased residential density.Moreover, Solano County should have considered the environmental impacts of such existing land use regulations when it adopted the General Plan.

For more information please contact Arthur J. Friedman, David P. Lanferman and Elizabeth S. Anderson. Arthur J. Friedman is a partner in the Land Use, Environmental and Natural Resources Practice Group in the firm’s San Francisco office. Dave Lanferman is a member of the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office. Elizabeth Anderson is an Associate in the land use group in the San Francisco office.