Lake Norconian Club
Foundation v. Department of Corrections & Rehabilitation
39 Cal. App. 5th 1044

The California Department of
Corrections (Department) operates a prison next to the historic Lake Norconian
Club, a former resort and hotel constructed in the 1920’s. The Department used
the building as a drug rehabilitation facility, and later, as prison
administrative offices. In 2012, the legislature decided to close the prison,
and the Department prepared an EIR for the planned closure. The EIR stated that
the Department could not allocate necessary funds to maintain the building due
to the Department’s other maintenance priorities. The legislature later changed
its mind, allowing the Department to continue operating the prison, however,
the Department decided that it would not maintain the former hotel.

Beginning in 2006, Lake Norconian
Club Foundation (Petitioners) repeatedly advocated for the Department to
maintain the hotel. Petitioners sued in 2014, alleging that the Department’s willful
and ongoing failure to maintain the hotel was a continuous discretionary action
with significant environmental impacts, and therefore, was a project under CEQA
for which no environmental review was conducted. The trial court agreed with Petitioners
and found the Department’s actions and omissions constituted a project under
CEQA, but nevertheless entered judgment in favor of the Department. The trial
court concluded that the statute of limitation began to run when the 2013 EIR
was certified, rendering the 2014 petition untimely.

Petitioners appealed the judgment,
and the Department cross-appealed, arguing that its inaction was not a project under

No prior California case has addressed
whether an agency’s failure to act could be considered a project. In federal NEPA
cases, courts have often held that inaction does not constitute ‘action’ (the
NEPA term analogous to a ‘project’ under CEQA). NEPA guidelines state that
inaction may constitute action where the omission would be judicially reviewable
under the APA, and case law has held that inaction in the face of a mandatory
duty to act creates an omission.

The Court noted that CEQA contains
no such guideline and Petitioners failed to identify a statute which created a
duty for the Department to maintain the hotel. The Court stated that CEQA
defines “project” by describing activities which constitute projects—failure to
act is not a project, even if the inactivity would lead to environmental
consequences. The Court noted the practical unworkability of deeming inactivity
a project, particularly when attempting to determine when the ‘inactivity
project’ commences or receives approval for purposes of CEQA’s statute of

Absent any statutory duty, the
Court held that the Department’s failure to act could not be deemed a project, nor
challenged for noncompliance with CEQA; and that inaction is not a project
under CEQA, at least where there is no affirmative duty to act.