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On March 30, 2022, the First District Court of Appeal published its opinion in Save the Hill Group v. City of Livermore (2022) 76 Cal.App.5th 1092, invalidating an Environmental Impact Report (“EIR”) for the Garaventa Hills Project (“Project”) because it failed to disclose the feasibility of funding sources or rezoning that could allow the City to preserve the property as open space. Instead, the EIR improperly concluded that the no-project (no-development) alternative was infeasible because the Project was zoned for residential development and that there was no current proposal for preservation of the property. This issue, the Court of Appeal held, was sufficiently raised in the administrative proceedings, and thus the Petitioner, Save the Hill, had exhausted its administrative remedies and preserved the issue for litigation.

In 2017, the City of Livermore approved a Revised EIR for the Project, which consisted of 44 homes on a previously undeveloped site. The site is part of a unique wetland area known as the alkali sink, and the site serves as suitable habitat for numerous species listed as threatened or endangered under federal and state law (e.g., California red-legged frog, tiger salamander, and vernal pool fairy shrimp). A local citizens group, Save the Hill (“Petitioners”), filed a petition for writ of mandate challenging the Project based on the City’s failure to consider significant environmental impacts and adequately investigate the no-project alternative to the Project. Specifically, the Petitioner alleged that the EIR did not evaluate the possibility of using existing funding to acquire and preserve the site as part of the EIR’s no-project alternative.  The trial court denied the petition on the threshold issue of Petitioner’s failure to exhaust its  administrative remedies on the no-project alternative issue.

The Court of Appeal reversed, holding that Petitioner had adequately exhausted its administrative remedies by raising generally the option of acquiring and preserving the site for environmental and open space purposes. Under CEQA, in order for an issue to be subject to judicial review, the exact issue must have been first raised during the administrative proceedings.  (Pub. Resources Code, § 21177; North Coast Rivers Alliance v. Marin Municipal Water Dist. Bd. of Directors (2013) 216 Cal.App.4th 614, 623, 631; South of Market Community Action Network v. City and County of San Francisco (2019) 33 Cal.App.5th 321, 347.)  The trial court held that the Petitioner did not exhaust administrative remedies on the no-project alternative issue because, while project opponents expressed their desire to preserve the site as open space, they did not express concern that the City insufficiently studied the no-project alternative. The Court of Appeal disagreed, finding that project opponents fairly apprised the City of the EIR’s failure to adequately flesh out the feasibility of the no-project alternative (preservation of the site). For example, Project opponents raised concerns about the Project’s destruction of the habitat, asked about whether the City could rezone the property as open space, discussed the availability of funds, and prompted discussion about whether the City acquiring the private land would constitute a taking. Although the Petitioner did not specifically refer to preservation in the EIR’s discussion of the no-project alternative, the Court held that the City was well apprised of Petitioner’s positions.

The Court also held that the EIR’s analysis of the no-project alternative was inadequate because it “failed to disclose and analyze information regarding the availability of funding sources that could have been used to purchase and permanently conserve the Project Site.” The failure to discuss the existence and feasibility of using available funding sources to purchase the Project Site for conservation amounted to prejudicial error, particularly given the numerous comments and questions surrounding that option. The City could not rely on the site’s zoning designation for its determination of infeasibility because zoning can always be changed. In order to meet CEQA’s informational requirements, the EIR was required to determine whether it was illegal or otherwise impossible for the City to acquire and conserve the Project Site, which it did not do. Additionally, the Court reasoned that the information that “two funding sources exist for the precise purpose of enabling the City to acquire environmentally sensitive areas such as Garaventa Hills for conservation is just the sort of information CEQA intended to provide those charged with making important, often irreversible, environmental choices on the public’s behalf.”

While it found the EIR’s no-project alternative discussion deficient, the Court of Appeal upheld the EIR’s analysis of impacts and mitigation as related to species and habitats. First, the Court found that the EIR appropriately deferred mitigation for impacts to vernal pool fairy shrimp because it committed to mitigating significant impacts and adopted specific performance criteria (a preservation ratio). Second, the Court upheld the EIR’s analysis of hydrologic impacts based on an expert report, which the Court held constituted substantial evidence. This was the case even though the EIR omitted any discussion of potential water quality degradation raised in an EIR for another Project.

Third, even though the lands were already protected as open space under the general plan, the Court upheld the compensatory mitigation for permanent loss of habitat. Because the general plan is aspirational and does not itself create a legal restraint on development, the compensatory mitigation imposed by the City would, in fact, add a legal restraint on development by explicitly requiring implementation of a conservation easement. The Court also distinguished the Fifth Appellate District’s decision in King & Gardiner Farms, LLC v. Cnty. of Kern (2020) 45 Cal.App.5th 814, which rejected the use of conservation easements as mitigation for loss of farmland because such easements do not replace the farmland lost to development. As the Court here noted, CEQA does not require measures to completely eliminate the environmental impacts of a project; instead, CEQA and its Guidelines explicitly permit mitigation through preservation of substitute resources.  (Citing Guidelines, § 1537(e).)  This holding is important after King and Gardiner, as it affirms the long line of cases finding that conservation easements can serve as effective mitigation under CEQA.

Based on the Court’s resolution of these issues, it instructed the trial court to enter judgment in favor of Petitioner on the no-project alternative analysis. In the authors’ opinion, this decision raises the bar and goes beyond the statute, guidelines, and prior case law by expanding the considerations that must come into play when identifying and evaluating the no-project alternative. This warrants careful attention during the CEQA process, and in identifying the bases for disregarding project alternatives put forth by project opponents.