• County Erroneously Granted a Development Permit Based On Payment of an Environmental Impact Fee In Lieu Of an Environmental Impact Report
  • April 1, 2009 | Author: Daniel J. O'Hanlon
  • Law Firms: Kronick Moskovitz Tiedemann & Girard, A Law Corporation - Sacramento Office; Kronick Moskovitz Tiedemann & Girard, A Law Corporation - San Luis Obispo Office
  • In California Native Plant Society v. County of El Dorado, (--- Cal.Rptr. 3d ---, Cal.App. 3 Dist., Jan. 28, 2009), a California Court of Appeal considered whether approval of a development permit was correct when approval was based upon the payment of an environmental impact fee which, according to the county, obviated the need to prepare an environmental impact report (“EIR”). The Court of Appeal concluded that approval of the development permit was incorrect because though county law had provisions for the payment of environmental impact fees, the development project approved based on the payment of those fees should have been subject to an environmental impact report.

    Starting in 1998, El Dorado County (“County”) adopted the Ecological Preserve Fee Ordinance (“Fee Ordinance”) in the County Code. The County adopted the ordinance because of concerns over dangers to native plants. The Fee Ordinance highlighted certain zoned areas where it would apply and further explained that developments within one of the zoned areas had a choice between either: A) paying a fee based on direct or indirect impacts caused by the development, or B) participation in a “Rare Plant Off-Site Mitigation Program.” The amount of the fee was to be reviewed annually and “adjusted to . . . insure that the anticipated fees are no more and no less than required for the purpose for which they are collected.”

    The County used the fees collected for a coordinated effort with several California and federal agencies to identify feasible preserve sites to purchase and manage in an effort to protect many of the endangered and threatened plants growing in the area. Out of these efforts, the County created the Pine Hill Preserve which consists of 2,900 acres out of a targeted 5,000 plus.

    In 2006, the County started a 68 acre development project, part of which is contiguous to Pine Hill Preserve. The County and its developer circulated a “mitigated negative declaration” for the project and tendered a $135,000 payment in accordance with option “A” under the Fee Ordinance. Immediately the County met with resistance at numerous Planning Commission hearings from representatives at the California and federal agencies, but also from the California Native Plant Society (“Society”). The representatives argued that the project would have a significant impact on endangered and threatened species without sufficient mitigation protections in place. The County tried to appease the interested parties, but eventually approved the project justifying approval in the Fee Ordinance which the County explained was satisfied.

    In 2007, the Society petitioned a trial court to overturn the project approvals based on alleged California Environmental Quality Act (“CEQA”) violations. Specifically, the Society argued that the County’s application of the Fee Ordinance was unsound because payment of a fee did not excuse the preparation of an EIR under CEQA. The trial court disagreed and denied the petition and the Society appealed.

    The Court of Appeal began with a discussion of the Fee Ordinance and the County’s and Society’s two contending interpretations. The County argued that the Fee Ordinance fully mitigates the environmental impacts to rare plants, thus justifying adoption of a “mitigated negative declaration.” Such a finding means that the County would not have to perform an EIR. On the other hand, the Society argued that the project would have a significant impact on rare plants despite the positive effects that the fee provides.

    The court agreed with the Society and many of the underlying arguments supporting its contention. Specifically, the court pointed out that the Fee Ordinance adopted by the County did not exempt projects developed under it from further environmental review. Moreover, even had the County intended to exempt projects from certain environmental review, it could not exempt projects from CEQA requirements. The court explained that the County had already adopted the requirements of CEQA through its own general plan.

    CEQA requires that “important habitats” be “fully” mitigated. The County fought back, citing a number of cases where “in-lieu fee programs” were found to fully mitigate the environmental impact of development projects. The court explained, however, that in those cases, the fee program was still evaluated under CEQA. Here, the Fee Ordinance essentially operates as a means for development projects to meet approval without scrutiny under CEQA.

    Next, the court discussed the fee structure implemented under the Fee Ordinance and found it flawed. Notably, the Fee Ordinance required that the County review the fee charged annually so that the fee could serve the needs of the conservation programs adopted by the County. After reviewing the record, the court discovered that the fee charged in connection with the Fee Ordinance had not once been reviewed or changed since its inception. Such neglect, the court suggested, could leave the County’s conservation program inadequately funded because of rising property values and inflation.

    Finally, the court explained that in this specific circumstance an EIR was required. Under CEQA, an EIR is required when a project “has the potential to threaten to eliminate a plant or animal community or substantially reduce the number or restrict the range of an endangered, rare or threatened species.” The court pointed to the great volume of evidence from the Planning Commission hearings where numerous experts challenged the project because of the environmental impact they foresaw without sufficient mitigation measures in place and the fee program does not protect the project from CEQA review.

    In conclusion, the Court of Appeal found that Fee Ordinance adopted by the County was not a sufficient mitigation measure for the development project approved by the County and instead the project should have been subject to an EIR in accordance with CEQA.

    What This Means To You
    This case highlights when an agency has a mitigation fee (or an in-lieu fee) for an environmental impact of a project, the fee does not excuse the agency from reviewing the environmental impact in accordance with CEQA.