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Overturning a rule announced 15 years ago, the California
Supreme Court has issued a landmark decision holding that the
requirement that parties first address their complaints at the
agency level before litigating those issues in court applies to
challenges to agency decisions regarding whether a project is
exempt from the California Environmental Quality Act. If the
decision-making agency holds a hearing on the project, future
litigants must make sure someone first apprised the agency of the
relevant issues before they can bring those claims to court.
Tomlinson v. Cnty. of Alameda, Case No. S188161, 2012 WL
2145906 (Cal. June 14, 2012).
The issue exhaustion rule has been murky ever since a 1997 case,
Azusa Land Reclamation Co. v. Main San Gabriel Basin
Watermaster, 52 Cal. App. 4th 1165, stated that the
requirement to first raise issues at the agency level did not apply
to a challenge regarding whether a project was exempt from
CEQA. More recently, two conflicting appellate court
decisions were published - one holding the issue exhaustion
requirement did not apply to exemption decisions
(Tomlinson), and another holding that it did (Hines v.
Cal. Coastal Comm'n, 186 Cal. App. 4th 830 (2010)).
The Supreme Court made the issue seem easy. The court
explained that CEQA expressly states that a proposed project can be
challenged only on grounds that "were presented to the public
agency orally or in writing by any person during the public comment
period...or prior to the close of the public hearing on the project
before the issuance of the notice of determination."
Cal. Pub. Res. Code § 21177(a). The court acknowledged
that when an agency determines that a project is exempt from CEQA,
there is no public comment period, so that aspect of the test does
not apply. But if the public agency holds a hearing on the
project before deciding it is exempt from CEQA, the court ruled the
statutory requirement applies. It does not matter whether the
hearing was required by law. Nor does it matter whether the
agency ultimately filed a notice of determination.
In Tomlinson, Alameda County held multiple hearings on
a proposed housing project. The County provided notice before
each hearing that the project fit within the infill housing CEQA
exemption. The County also provided notice that if parties
did not raise issues during the agency proceedings, they could not
raise those issues in court. The litigants appeared at the
county hearings and lodged several complaints. But no one
ever argued that the project did not fit within the infill housing
exemption because it was located on unincorporated county land
rather than within city limits. Nevertheless, the litigants
chose to highlight this issue when challenging the County's
approval in court.
The court of appeal excused the litigants' oversight, ruling
that the requirement to first raise issues at the agency level does
not apply to exemption decisions. The Supreme Court
disagreed, holding that the requirement to first raise issues at
the agency level is a necessary prerequisite to litigation whenever
the agency holds a hearing on the project before making its
decision.
The California Supreme Court has not been reluctant to apply
CEQA's litigation prerequisites to dismiss suits in which
litigants have failed to comply with the applicable
requirements. While the court recognizes CEQA's
importance, it has read the statutory prerequisites to litigation
strictly, providing agencies and developers with greater certainty
that issues will be resolved according to CEQA's timelines and
restricted to those raised during the agency proceedings.
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