Development Rights and CEQA Challenges: Court of Appeal Upholds 3-Year Tolling Agreement in CEQA Lawsuit - Cause of action governed by a 30-day limitations period

May 29, 2012

by Matthew Hinks

The California Legislature and the courts have recognized that challenges to the California Environmental Quality Act (CEQA), if allowed to drag on, would impede the decisions of public agencies regarding land use. For this reason, CEQA imposes very short limitations periods and requires CEQA cases be given priority in both the trial courts and the courts of appeal.

But in a potentially troubling new case, the California Court of Appeal explicitly blessed the type of unreasonable litigation delay the Legislature protected against in enacting CEQA.

In Salmon Protection and Watershed Network v. County of Marin, 205 Cal. App. 4th 195 (2012) ("SPAWN"), the California Court of Appeal has upheld the use of tolling agreements between public agencies and parties challenging the adequacy of an Environmental Impact Report (EIR) prepared in connection with the adoption of a general plan amendment. While the use of tolling agreements in connection with the California Environmental Quality Act (CEQA) and other land use disputes is not uncommon and such agreements are routinely enforced, the agreements at issue in the SPAWN case were anything but typical.

Background

The County of Marin, on November 6, 2007 adopted the Marin Countywide General Plan Update and, in connection with it, certified an EIR and filed a Notice of Determination (NOD). Under CEQA, the filing of the NOD starts the clock running on a short, 30-day statute of limitations period within which challenges to the sufficiency of an EIR may be brought. Subsequently, SPAWN and the County entered into a series of tolling agreements extending the 30-day limitations period for almost three years to September 14, 2010.

SPAWN filed a petition for writ of mandate upon the expiration of the final tolling agreement against the county and its board of supervisors alleging the EIR's cumulative impacts analysis was deficient. SPAWN sought a writ of mandate ordering the county to set aside its CEQA findings in relation to impacts upon certain species in the San Geronimo watershed and to prepare a supplemental EIR, and for an injunction "prohibiting the county from approving development projects within stream zones in the San Geronimo watershed until the county has complied with the writ."

A group of property owners within the affected area intervened in the action alleging that SPAWN's petition was untimely because the tolling agreements were not permitted under CEQA. The property owners alleged in their complaint in intervention that "the pendency of the action creates uncertainty about what 'development' if any will be allowed on their properties in the future", and that the "injunctive relief sought by the petition would directly and immediately restrict interveners from any development, or further development, on their properties". The trial court subsequently sustained a demurrer to the complaint in intervention.

Court of Appeal - Focus on Settlement

On appeal, the court noted that tolling agreements in the CEQA context present countervailing considerations. On the one hand, it is the "strong" public policy of the State of California to ensure prompt resolution of CEQA disputes. The Legislature and the courts have recognized that CEQA challenges have the potential to hamper public agencies' decisions regarding land use. Thus, CEQA imposes short limitations periods and requires that CEQA cases be given priority in both the trial courts and the courts of appeal. However, as the SPAWN court recognized, "[t]here is an equally strong public policy . . . to encourage the settlement of controversies in preference to litigation." In fact, according the court, in an allusion to the current budget crisis facing the California courts system, the need for settlements is greater than ever before and, without them, "our system of civil adjudication would quickly break down."

Thus, the court held, "[i]f all parties directly involved in a controversy concerning the adequacy of an EIR or compliance with other provisions of CEQA are disposed to seek a mutually acceptable means of resolving the controversy and agree to toll the period for commencing litigation, the interests of both those parties and the public are promoted by permitting the settlement discussions to proceed without the distraction of litigation." Accordingly, the court affirmed the trial court's decision sustaining SPAWN's demurrer.

Does CEQA not impose any limits?

What is striking about the SPAWN decision is that the court was apparently untroubled by the fact that the public agency and SPAWN had purported to toll the statute of limitations by almost 3 years on a cause of action governed by a 30-day limitations period. It is difficult to harmonize this extreme delay caused by the tolling agreements with the expressed intent of the Legislature to expedite CEQA cases. The court's failure to grapple with the length of the delay leaves its attempts to reconcile CEQA's express requirements of expedited litigation with a more inchoate public policy favoring settlements unfulfilling. Indeed, the court itself noted, that one of the justifications for the policy favoring settlement over litigation, is that settlements will usually "resolve the controversy much sooner than could be accomplished by trial and appeal." By contrast, most CEQA cases would be litigated and decided on appeal in half the time the tolling agreements at issue in SPAWN lasted.

The typical CEQA tolling situation involves the approval of a site-specific project, certification of environmental review by a public agency and a project opponent. A party whose project has been approved by the public agency is a real party in interest and must be named as such in a CEQA action challenging the approval. In these cases, the law requires that, to be effective, an agreement to toll the limitations period must include the recipient of the approval along with the agency and project opponent. Although the proposed interveners here alleged direct and immediate consequences to their property on account of the pendency of the challenge to the EIR, the court considered their interest "indirect"; therefore, their concurrence to the tolling agreement was not required.

Perhaps most problematic about the Spawn opinion is the court's explicit blessing of precisely the kind of unreasonable litigation delay the Legislature protected against when enacting CEQA. While the proposed interveners alleged that the lack of finality to the CEQA review process would restrict them "from any development, or further development, on their properties", the court noted there was no order in effect precluding the county from considering any permit requests they submitted. However, as even the court itself noted, if the county chose to defer consideration of the permit requests pending resolution of the CEQA controversy, the proposed interveners would have no right to challenge that discretionary decision, meaning their permit applications would be left in legal limbo until the parties to the tolling agreement elected to pursue their action in court.

Although the likelihood of that scenario playing out is unclear, a more effective subversion of the policy behind expediting CEQA litigation could hardly be imagined. The SPAWN court may not end up with the last word on this subject.

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Matthew Hinks is a litigator with a wide-ranging practice that focuses primarily on the representation of real estate developers in difficult land use cases. Matt has extensive experience litigating complex mandamus actions and other claims involving signage disputes, governmental takings, CEQA challenges, planning and zoning law, civil rights violations, eminent domain issues, title disputes, lease disputes and community redevelopment and density bonus law. He has extensive experience in both federal and state courts, including trial courts and courts of appeal, as well as in arbitration, mediation and administrative settings. Contact Matt at MHinks@jmbm.com or 310.201.3558.