United States: Sacramento Kings Win Again; Second CEQA Challenge Rejected

Saltonstall v. City of Sacramento (2/18/2015, 3d Civil No. C077772). For prior post on a related case, see here.

The Court of Appeal for the Third Appellate District of California has ruled in favor of the City of Sacramento with regard to a series of challenges brought under CEQA to certification of an EIR and approval of a project to build a new arena in downtown Sacramento. The project involves a partnership between the City and Sacramento Basketball Holdings LLC to build a downtown arena at which the Sacramento Kings will play. To facilitate the timely opening of a new downtown arena, the Legislature modified several deadlines under CEQA by adding section 21168.6.6 to the Public Resources Code. Section 21168.6.6 also allows the City to exercise limited eminent domain powers to acquire property for the project before its environmental review, but does not substantively alter other CEQA requirements. The court held that the City had not prematurely committed itself to the project; the EIR was not deficient for failing to address the remodel of the existing Sleep Train arena; the traffic analysis was not deficient; the failure to study "crowd safety" did not implicate CEQA; and trial court orders may be reviewed only by writ petition, not direct appeal.

The City Did Not Prematurely Commit Itself to the Project

The court first ruled that the City did not prematurely commit itself to approving the project before completing its environmental review. Saltonstall argued that the City had committed itself to the project before completing the EIR process because, before the EIR was certified and approved on May 20, 2014: (1) the City and Sacramento Basketball Holdings entered into, and the city council approved, a preliminary, non-binding term sheet outlining the terms of the transaction; and (2) the City exercised eminent domain to acquire a portion of a block for the site of the downtown arena.

Courts apply a two-prong test to ascertain whether a public agency has improperly committed itself prematurely under CEQA. Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, 129. First, the analysis focuses on "'whether, in taking the challenged action, the agency indicated that it would perform environmental review before it makes any further commitments to the project, and if so, whether the agency has nevertheless effectively circumscribed or limited its discretion with respect to that environmental review. Second, the analysis should consider the extent to which the record shows that the agency or its staff have committed significant resources to shaping the project. If, as a practical matter, the agency has foreclosed any meaningful options to going forward with the project, then for the purposes of CEQA the agency has 'approved' the project.'" (Save Tara at p. 139, quoting Remy et al., Guide to Cal. Environmental Quality Act (CEQA) (11th ed. 2006), at p. 71).

Applying these standards, the court held that although the City took steps towards planning the proposed arena prior to completing its environmental review, the record did not establish premature commitment to the project. The court focused on the preliminary non-binding term sheet which declared that the City had "no obligation to enter into definitive transaction documents, or any transaction," and that "no project or definitive transaction documents shall be approved, until after" the downtown arena project was "reviewed in accordance with the requirements of [CEQA]." The term sheet also expressly provided that the City retained complete discretion to review the project, mitigate adverse environmental effects, and disapprove the project based on the environmental review. Therefore, the term sheet was not a binding contract between the parties, and was instead a non-binding agreement to negotiate. As such, entering into the term sheet did not constitute premature commitment to the project by the City.

The court also concluded that the City's exercise of eminent domain prior to the completion of environmental review was allowed under CEQA because CEQA provides an exception to the prohibition on commitment to a project before environmental review for purposes of land acquisition. In addition, section 21168.6.6 expressly provided that the City could prosecute an eminent domain action prior to completing the environmental review. Consequently, the City had specific statutory authorization to acquire the property through eminent domain without running afoul of CEQA. Plaintiff's remaining arguments regarding the City's pre-commitment were also determined to be meritless under a similar analysis.

 The EIR Was Not Deficient for Failing to Analyze the Remodel of Sleep Train Arena

Second, the court held that the City's environmental report was not deficient for failing to study the option of remodeling the Sleep Train Arena, an arena six miles north of downtown, as an alternative to building the new downtown arena. The City studied four alternatives to the downtown arena project, and explained that those alternatives, in addition to the Sleep Train Arena remodel alternative, all failed to satisfy many of the City's objectives for the project, noting that "a number of objectives are tied directly to locating the [new arena] in downtown." Furthermore, one of the alternatives considered was building a new arena next to the Sleep Train Arena. In analyzing this alternative, the City determined that the location of the Sleep Train Arena was determined to be infeasible due to floodplain issues. The court noted that infeasible alternatives that do not meet project objectives need not be studied even when such alternatives might be imagined to be environmentally superior. The court went on the explain that regardless of whether the Sleep Train Arena remodel alternative might have been environmentally superior to the project approved, the remodel alternative would have suffered the same problems of location and infeasibility that caused the City to reject the other alternatives, and thus, the City's environmental review was not deficient for failing to consider that alternative.

Traffic Analysis Not Deficient

Third, the court ruled that the EIR analysis properly studied the effects of the project on interstate traffic traveling on the nearby section of the I-5  because (a) the City studied the timing and extent of traffic congestion on the freeway that was likely to result due to the project, and, furthermore, the EIR; and (b) the city council's statement of overriding considerations demonstrated that the decision-makers were informed of and understood the adverse consequences on I-5 traffic resulting from the downtown arena project. The court noted that while an EIR must suffice to inform the decision-making public agency about the environmental consequences of approving a project, CEQA does not "mandate perfection, nor does it require an analysis to be exhaustive." El Morro Community Assn. v. California Dept. of Parks & Recreation (2004) 122 Cal.App.4th 1342, 1249, quoting Defend the Bay v. City of Irvine (2004) 119 Cal.App.4th 1261, 1265. As such, the court noted that a deferential standard of review applies, and an EIR must be upheld if there is substantial evidence in the record to support the agency's decision that the EIR is adequate and complies with CEQA. Because the City's draft EIR studied and disclosed existing problems with the section of the I-5 at peak traffic times and how the downtown arena project would worsen traffic congestion, and also set forth the basis for its methodology and the source of its factual data, the EIR analysis of traffic congestion met the requirements of CEQA.

Failure to Study "Crowd Safety" Does Not Implicate CEQA

Fourth, the court also held that the City's failure to study post-event crowd safety and potential for violence did not implicate CEQA, explaining that mere speculation about possible crowd violence and its possible effect on the environment are social issues that do not compel EIR review.  Additionally, the court found substantial evidence supported the EIR's conclusions regarding the expected crowd size and the potential for police service impacts.

Trial Court Orders May Be Reviewed Only by Writ Petition, Not Direct Appeal

Lastly, the court held that review of trial court orders on Public Records Act motions may only be made by writ petition, not by direct appeal, and thus affirmed the trial court's denial of plaintiffs' motion to augment the administrative record.

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