In Arcadians for Environmental Preservation v. City of Arcadia (Feb. 16, 2023, No. B320586) ___Cal.App.5th___ [2023 Cal. App. LEXIS 103] the Second District Court of Appeal found no error in a trial court ruling that there had been a failure to exhaust administrative remedies where project opponents merely raised general environmental objections without identifying any reason why the agency could not rely on a CEQA exemption. The Court also found that exhaustion was not excused due to minor inconsistencies in descriptions of the basis for the exemption, and found that the project opponent failed to demonstrate that any exception applied.
Beginning in 2018, Julie Wu (Wu) sought approval to expand her single-family home. In response to an initial denial from the applicable architectural review board. Following two denials and project revisions, Wu appealed the denial to the City of Arcadia (City) Planning Commission. City staff recommended that the expansion be approved and that it was exempt from CEQA under the Class 1 categorical exemption as an addition to an existing facility. Community members spoke in favor and against the project, including Wu’s neighbor, who expressed privacy concerns. The Planning Commission voted to approve the project, relying on the CEQA exemption. The neighbor administratively appealed to the City Council but the appeal was denied.
The neighbor then formed Arcadians for Environmental Protection (AEP) and filed a lawsuit challenging the approval under CEQA and the Planning and Zoning Law. Specifically, AEP argued under CEQA that the exemption did not apply and that City failed to consider whether any exception to the exemption existed. The trial court denied the petition, finding that AEP had failed to exhaust administrative remedies by not raising its arguments at the administrative level, and rejected the contentions on the merits as well. AEP timely appealed, though abandoned its Planning and Zoning Law claim on appeal.
The Court of Appeal first considered exhaustion of administrative remedies. Under Public Resources Code section 21177, alleged grounds for noncompliance with CEQA must be presented to the approving agency as a prerequisite to filing a lawsuit. Here, AEP argued that the neighbor’s comments to the City made reference to CEQA and potential environmental impacts, satisfying the requirement. However, the Court found the general references insufficient to satisfy issue exhaustion. While the neighbor had argued that an EIR was required, this alone failed to provide adequate notice of the neighbor’s complaint as the objection had not identified why the exemption’s requirements might not be satisfied.
AEP also argued that the exhaustion requirement was excused because the notice of the hearing describing the basis for application of the exemption contained minor inconsistencies with the subsequent notice of exemption. But the Court found these to be inconsequential, as no member of AEP addressed application of the exemption in any way.
The Court also upheld denial of the petition on the merits. AEP argued that the record was devoid of evidence that the City considered whether any exception foreclosed application of the categorical exemption. However, the Court recognized that an agency’s finding that a categorical exemption applies necessarily implies that the agency has also concluded that no exception applies. AEP also argued affirmatively that the cumulative effects exception applied because the expansion, when considered with other projects in the area, could cause significant, cumulative impacts. However, the Court found that AEP had not carried its burden to produce evidence to support its argument. The neighbor’s administrative references to other projects in the area, which did not contain evidence of impacts created by the projects, were insufficient. As such, the Court upheld denial of the petition in full.
The facts here closely mirror those of another recent case, in which petitioners challenged a single-family home project under CEQA despite the applicable CEQA exemption and failed to exhaust administrative remedies as well. (Jenkins v. Brandt-Hawley (2022) 86 Cal.App.5th 1357.) As described in our summary of that case, the attorney who represented those petitioners is now facing a malicious prosecution action arguing that the suit was frivolous, which the First District ruled has a reasonable probability of succeeding. The attorney has filed a petition for review with the California Supreme Court, seeking to overturn that ruling, which has yet to be granted or denied.
- Issue exhaustion requires the exact issue being litigated to have been raised in administrative proceedings. In a case involving a categorical exemption, it is not sufficient to merely say that an EIR is required. Rather, a court will look for statements by opponents identifying why the categorical exemption is inapplicable. If not excused, a failure to exhaust can be fatal to a subsequent lawsuit.