recorder · pdf fileparty’s demurrer to state court action did not result in waiver of...

CALIFORNIA DAILY OPINION SERVICENinth Circuit Court of Appeals | California Supreme Court | California Court of Appeals

Bankruptcy Appellate Panel | California Attorney General | US Supreme Court

Volume 32, Number 24 Full Case Listings updated daily at www.therecorder.com/cdos Monday, February 5, 2018

RECORDER

SUPPLEMENT TO THE RECORDER, SAN FRANCISCO, CA

The California Daily Opinion Service containsall opinions by:

• U.S. SUPREME COURT• U.S. NINTH CIRCUIT COURT OF APPEALS AND BANKRUPTCY APPELLATE PANEL• CALIFORNIA SUPREME COURT• CALIFORNIA COURTS OF APPEAL (ALL DISTRICTS)• CALIFORNIA ATTORNEY GENERAL

All content in the California Daily Opinion Service is property of The Recorder and shall not be republished or photocopied without express written consent. Copyright 2018. ALM Media Properties, LLC. All rights reserved.Before citing the California Daily Opinion Service, counsel should verify the continuing publication status of a case. Exhibits and appendices to opinions will be included when-ever possible if they are reproducible and merit inclusion. While every effort is made to report accurately, minor errors may occur. To report errors, or for other inquiries, please contact: [email protected].

Do notphotocopy

NINTH CIRCUIT COURT OF APPEALS

United States v. Watson HI Criminal Law 1155Armed bank robbery under federal law constitutes crime of violence (per curiam)

Kenny v. Wal-Mart Stores, Inc. C.D. CA Civil Procedure 1157Party’s demurrer to state court action did not result in waiver of right to removal (M.D. Smith, J.)

Erotic Service Provider Legal Education and Research Project v. Gascon 1160Order

SUPREME COURT OF CALIFORNIA

Kurwa v. Kislinger 1161Order modifying opinion

CALIFORNIA COURTS OF APPEAL

John R. Lawson Rock & Oil, Inc. v. State Air Resources Board C.A. 5th Environmental Law 1162

Agency’s issuance of “Regulatory Advisory” constituted approval of project (Detjen, J.)

Visalia Retial, LP v. City of Visalia C.A. 5th Environmental Law 1176Record failed to support contention that cap on size of retail stores would lead to urban decay (Poochigian, Acting P.J.)

February 5, 2018 CALIFORNIA DAILY OPINION SERVICE SummARIES 1153

SUMMARIESCivil ProcedureParty’s demurrer to state court action did not result in waiver of right to removal (M.D. Smith, J.)

Kenny v. Wal-Mart Stores, Inc.9th Cir.; February 1, 2018; 17-56809

The court of appeals vacated a district court remand order. The court held that a party’s demurrer to a state court com-plaint did not result in waiver of its right to remove the case to federal court..

Kris Kenny filed a putative class action in California state court against Wal-Mart Stores, Inc., challenging Wal-Mart’s policy requiring employees who have suffered workplace-related injuries to submit to drug and/or urine testing. Wal-Mart filed a demurrer and motion to strike. Prior to hearing on the demurrer, Wal-Mart removed the case to federal court, asserting that the district court had jurisdiction over the case pursuant to the Class Action Fairness Act (CAFA).

The district court, acting sua sponte, remanded the action to state court, finding that Wal-Mart’s filing of a demurrer resulted in waiver of its right to remove.

The court of appeals vacated the district court order and remanded, holding that the district court exceeded its statu-tory authority in remanding sua sponte based on a non-ju-risdictional defect. Although a district court must remand for lack of subject matter jurisdiction, it may remand for de-fects other than lack of subject matter jurisdiction only upon a timely motion to remand. Additionally, the district erred in concluding that Wal-Mart waived its right to remove the action. Wal-Mart could not have waived its right to remove by taking actions in state court unless it was apparent that the case was removable. Here, since it was undisputed that Kenny’s complaint was indeterminate as to the amount in controversy, Wal-Mart’s demurrer did not result in waiver.

Criminal LawArmed bank robbery under federal law constitutes crime of violence (per curiam)

United States v. Watson

9th Cir.; February 1, 2018; 16-15357The court of appeals affirmed district court judgments.

The court held that armed bank robbery under federal law is a crime of violence.

The government charged Marcus Watson and Rogussia Danielson with armed bank robbery committed “by force, violence, and by intimidation,” in violation of 18 U.S.C. §2113(a) and (d), and with using or carrying a firearm dur-ing a crime of violence in violation of §924(c)(1)(A). They later filed motions under 28 U.S.C. §2255 challenging the validity of their §924(c) convictions. They argued that their convictions for using or carrying a firearm during a crime of violence were unlawful because the predicate offense for that charge—armed bank robbery—no longer qualified as a crime of violence.

The district court denied the motions.The court of appeals affirmed, holding that armed bank

robbery is a crime of violence under §924(c). Under Johnson v. United States, 559 U.S. 133 (2010), to qualify as a crime of violence based on the use or threatened use of physical force, the “physical force” must be “violent” physical force, that is, “force capable of causing physical pain or injury.” The fed-eral bank robbery statute provides for a taking or attempted taking “by force and violence, or by intimidation.” Although defendants argued that intimidation does not necessarily in-volve the use of violent physical force, this argument has previously been addressed and rejected. Further, a defendant may be convicted of bank robbery only if he knowingly uses intimidation, which necessarily entails the knowing use, at-tempted use, or threatened use of violent physical force. De-fendants’ remaining challenges to the statute were similarly without merit.

February 5, 2018 CALIFORNIA DAILY OPINION SERVICE SummARIES 1154

Environmental LawAgency’s issuance of “Regulatory Advisory” constituted approval of project (Detjen, J.)

John R. Lawson Rock & Oil, Inc. v. State Air Resources BoardC.A. 5th; January 31, 2018; F074003

The Fifth Appellate District affirmed a judgment. The court held that an agency’s issuance of a “Regulatory Ad-visory” regarding a proposed project qualified as approval of that project for purpose of the California Environmental Quality Act (CEQA), even though official approval did not issue until over a year later.

In 2008, the State Air Resources Board (SARB) adopted the “Truck and Bus Regulation,” setting requirements for ve-hicle owners to retrofit and upgrade their vehicles to reduce emissions. In November 2013, SARB issued a Regulatory Advisory concerning its plans to modify the regulation. In March 2014, SARB released an Initial Statement of Rea-sons for Proposed Rulemaking (initial statement). The initial statement provided recommendations for modifications in line with those discussed prior to issuance of the Regulatory Advisory. Following release of the initial statement, SARB solicited and received public comments on its proposals. In November 2014, SARB issued Resolution 14-41, adopting the final regulation order for the modified regulations. SARB issued its final approval in December 2014.

Fleet operators John R. Lawson Rock & Oil, Inc. and others filed a petition for writ of mandate, challenging the modifications under both under both CEQA and the Admin-istrative Procedures Act (APA). The trial court granted the writ petition, ruling in the operators’ favor on both claims.

The court of appeal affirmed, holding that SARB improp-erly approved the modifications prior to completion of an environmental study. Under CEQA, “public agencies shall not undertake actions concerning the proposed public project that would have a significant adverse effect or limit the choice of alternatives or mitigation measures, before completion of CEQA compliance.” Here, however, in issuing its Novem-ber 2013 Regulatory Advisory, SARB necessarily limited its choice of alternatives or mitigation measures and committed itself to a definite course of action on the modifications by telling fleet owners they could “take advantage of applica-ble anticipated regulatory changes.” Generally speaking, an agency acts to approve a proposed course of action when it makes its earliest firm commitment to it, not when the final or last discretionary approval is made. This was what hap-pened here. By issuing the Regulatory Advisory, SARB took action that significantly furthered the proposed regulations in a manner that foreclosed the alternative of not modifying the regulations. Such conduct qualified as approval of the modified regulations, prior to environmental analysis and in violation of CEQA.

Environmental LawRecord failed to support contention that cap on size of retail stores would lead to urban decay (Poochigian, Acting P.J.)

Visalia Retial, LP v. City of Visalia

C.A. 5th; January 4, 2018; F074118The Fifth Appellate District affirmed a trial court order. In

the published portion of its opinion, the court held that the record failed to support the petitioner’s contention that a cap on the size of retail stores would lead to urban decay.

As part of a proposed update to its general plan, the City of Visalia proposed to limit commercial use in so-called “Neighborhood Commercial” areas to tenant occupancies no greater than 40,000 square feet in size. Visalia Retail, LP objected to the proposed restriction, arguing it would lead to urban decay. Visalia Retail submitted a report prepared by realtor Thomas Anderson. Anderson argued that the 40,000 square-foot cap would cause grocers to refuse to locate in neighborhood commercial centers, which would cause va-cancies, which in turn would result in urban decay. The city certified a final EIR and adopted the general plan update.

Visalia Retail filed a petition for writ of mandate chal-lenging that decision, arguing that the city violated CEQA by failing to address the potential for urban decay in its EIR. The trial court denied the petition.

The court of appeal affirmed, holding that the Anderson report failed to provide substantial evidence from which a fair argument could be made that the update might cause sig-nificant effects on the environment. Anderson made four ar-guments in support of his contention that the 40,000 square-foot cap would lead to urban decay. First, he asserted that he was personally unaware of any grocery stores willing to build new stores under 40,000 square feet. This assertion was insufficient to support an argument that no grocers would be willing to build such stores. Second, Anderson’s report identified four grocers whose business model requires their “typical” stores to be at least 50,000 square feet. But this observation pertained to four grocers only. It did not sug-gest that other grocers would be similarly unwilling to build stores under 40,000 square feet. Nor did it even establish that the four identified grocers could not build “atypical” stores of smaller sizes. Third, the report pointed to one grocer’s failed attempts to build stores 10,000 to 20,000 square feet in size across the United States. This evidence did not support a fair argument that a 40,000-square foot cap would produce similar results. Finally, the report identified three sub-40,000 sq. ft. supermarkets that were unable to maintain long-term successful operations in Visalia. Absent any analysis as to why those stores closed, it was mere speculation to conclude they closed because of their size. In sum, the report did not provide the requisite evidentiary basis for Visalia Retail’s challenge.

February 5, 2018 CALIFORNIA DAILY OPINION SERVICE NINth CIRCuIt COuRt OF APPEAL 1155

FULL TEXT OPINIONNinth Circuit Court of Appeals

Cite as 18 C.D.O.S. 1155

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v. MARCUS KALANI WATSON, AKA

Kiki Seui; ROGUSSIA EDDIE ALLEN DANIELSON, Defendants-Appellants.

No. 16-15357United States Court of Appeals for the Ninth CircuitD.C. Nos. 1:15-cv-00313-DKW-KSC, 1:15-cv-00390-DKW-BMK, 1:14-cr-00751-DKWAppeal from the United States District Court for the District of Hawaii Derrick Kahala Watson, District Judge, PresidingArgued and Submitted September 13, 2017 San Francisco, CaliforniaFiled February 1, 2018Before: J. Clifford Wallace and Paul J. Watford, Circuit Judges, and W. Louis Sands,* District Judge.Per Curiam Opinion

*The Honorable W. Louis Sands, United States District Judge for the Middle District of Georgia, sitting by designation.

COUNSELPeter C. Wolff Jr. (argued), Federal Public Defender,

Office of the Federal Public Defender, Honolulu, Hawaii; Alvin Nishimura, Kaneohe, Hawaii; for Defendants-Appellants.

John P. Taddei (argued), Attorney, Appellate Section; Sung-Hee Suh, Deputy Assistant Attorney General; Leslie R. Caldwell, Assistant Attorney General; Criminal Division, United States Department of Justice, Washington, D.C.; Thomas J. Brady, Assistant United States Attorney; United States Attorney’s Office, Honolulu, Hawaii; for Plaintiff-Appellee.

Mia Crager, Assistant Federal Defender; Heather E. Williams, Federal Defender; Office of the Federal Public Defender, Sacramento, California; David M. Porter, Administrative Office of the United States Courts, Washington, D.C.; for Amici Curiae Ninth Circuit Federal Public and Community Defenders and the National Association of Criminal Defense Lawyers.

OPINIONPER CURIAM:

We must decide whether armed bank robbery under fed-eral law is a crime of violence under 18 U.S.C. § 924(c). We hold that it is.

The government charged Marcus Watson and Rogussia Danielson with armed bank robbery committed “by force, violence, and by intimidation,” in violation of 18 U.S.C. § 2113(a) and (d), after they robbed an American Savings Bank while armed with handguns. The government also charged them with using or carrying a firearm during a crime of vio-lence (namely, the armed bank robbery), in violation of 18 U.S.C. § 924(c)(1)(A). Watson and Danielson pleaded guilty to both offenses. The district court sentenced Watson to 192 months and Danielson to 182 months in prison.

Watson and Danielson did not appeal. But less than a year after entry of judgment, they filed motions under 28 U.S.C. § 2255 challenging the validity of their § 924(c) convictions. They argued that their convictions for using or carrying a firearm during a crime of violence are unlawful because the predicate offense for that charge—armed bank robbery—no longer qualifies as a crime of violence. The district court de-nied the motions but granted certificates of appealability. On appeal, the government does not raise any procedural barriers to our consideration of this collateral attack.

Section 924(c) imposes a mandatory consecutive term of imprisonment for using or carrying a firearm “during and in relation to any crime of violence.” 18 U.S.C. § 924(c)(1)(A). The term “crime of violence” is defined as an offense that is a felony and—

(A) has as an element the use, attempted use, or threat-ened use of physical force against the person or property of another, or

(B) that by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense.

18 U.S.C. § 924(c)(3). Clause (A) of this definition is known as the “force clause” and clause (B) is known as the “residual clause.” We need not address the residual clause because we conclude that the relevant offense of armed bank robbery is a crime of violence under the force clause. See United States v. Gutierrez, 876 F.3d 1254, 1256 (9th Cir. 2017) (per curiam).

To qualify as a crime of violence under the force clause, the element of “physical force” must involve “violent” physi-cal force—“that is, force capable of causing physical pain or injury.” Johnson v. United States, 559 U.S. 133, 140 (2010). Although Johnson construed the force clause of the Armed Career Criminal Act, 18 U.S.C. § 924(e)(2)(B)(i), the John-son standard also applies to the similarly worded force clause of § 924(c)(3)(A). Gutierrez, 876 F.3d at 1256.

The question, then, is whether bank robbery in violation of § 2113(a) meets the Johnson standard and thus qualifies as a


crime of violence. We use the categorical approach to make that determination. See Mathis v. United States, 136 S. Ct. 2243, 2248 (2016). Under this approach, the sole focus is on the elements of the relevant statutory offense, not on the facts underlying the convictions. Id. An offense is categorically a crime of violence only if the least violent form of the offense qualifies as a crime of violence. See Moncrieffe v. Holder, 569 U.S. 184, 190–91 (2013).

The federal bank robbery statute provides, in relevant part:

Whoever, by force and violence, or by intimidation, takes, or attempts to take, from the person or presence of another, or obtains or attempts to obtain by extortion any property or money or any other thing of value belonging to, or in the care, custody, control, management, or pos-session of, any bank, credit union, or any savings and loan association [shall be punished according to law].

18 U.S.C. § 2113(a).1

Watson and Danielson argue that bank robbery “by force and violence, or by intimidation” does not constitute a crime of violence. They do not dispute that committing bank rob-bery “by force and violence” necessarily entails the use of violent physical force as Johnson requires. But they argue that the least violent form of the offense—bank robbery “by intimidation”—does not meet the requirements for a crime of violence for two reasons.

First, they contend that bank robbery by intimidation does not necessarily involve violent physical force as required under Johnson. We recently confronted this exact argument in Guti-errez and rejected it. See 876 F.3d at 1256–57. In Gutierrez, we held that “intimidation” as used in § 2113(a) requires that the defendant take property “in such a way that would put an ordinary, reasonable person in fear of bodily harm” and that a “defendant cannot put a reasonable person in fear of bodily harm without threatening to use force capable of causing physi-cal pain or injury.” Id. at 1257 (internal quotation marks omit-ted). We concluded that bank robbery qualifies as a crime of violence because even its least violent form “requires at least an implicit threat to use the type of violent physical force nec-essary to meet the Johnson standard.” Id. In so holding, we joined every other circuit to address the same question. See United States v. Ellison, 866 F.3d 32, 39–40 (1st Cir. 2017); United States v. Brewer, 848 F.3d 711, 715–16 (5th Cir. 2017); United States v. McBride, 826 F.3d 293, 296 (6th Cir. 2016); United States v. McNeal, 818 F.3d 141, 153 (4th Cir. 2016).

Second, Watson and Danielson argue that bank robbery by intimidation does not meet the mens rea requirement for a crime of violence. In Leocal v. Ashcroft, 543 U.S. 1 (2004),

1. Section 2113(a) also prohibits entering a bank with intent to commit a felony affecting the bank. 18 U.S.C. § 2113(a) (second para-graph). Although that offense is not a crime of violence, it is irrelevant to our analysis because it is divisible from the § 2113(a) bank robbery offense of which Watson and Danielson were convicted. See United States v. Selfa, 918 F.2d 749, 752 n.2 (9th Cir. 1990).

the Supreme Court held that a crime of violence requires “a higher degree of intent than negligent or merely acciden-tal conduct.” Id. at 9. Watson and Danielson contend that a defendant who negligently intimidated a victim could be convicted of bank robbery because intimidation is defined from a reasonable victim’s perspective. See Gutierrez, 876 F.3d at 1257. But a defendant may be convicted of bank robbery only if the government proves that he at least “pos-sessed knowledge with respect to the . . . taking of property of another by force and violence or intimidation.” Carter v. United States, 530 U.S. 255, 268 (2000); see also Ellison, 866 F.3d at 39. Thus, contrary to Watson and Danielson’s contention, a defendant may not be convicted if he only neg-ligently intimidated the victim. Carter, 530 U.S. at 269. The offense must at least involve the knowing use of intimidation, which necessarily entails the knowing use, attempted use, or threatened use of violent physical force.

The Ninth Circuit Federal Public and Community Defend-ers and the National Association of Criminal Defense Law-yers, as amici curiae, raise one additional argument. They contend that even if bank robbery “by force and violence, or by intimidation” is a crime of violence, the statutory offense of bank robbery contained in § 2113(a) still does not qualify as one. They argue that § 2113(a) prohibits one indivisible offense of bank robbery with three alternative means of com-mitting it: (1) by force and violence; (2) by intimidation; or (3) by extortion. And, they assert, the least violent form of that offense—bank robbery by extortion— does not qualify as a crime of violence. See Moncrieffe, 569 U.S. at 190–91.

Their argument fails because § 2113(a) does not contain one indivisible offense. Instead, it contains at least two sepa-rate offenses, bank robbery and bank extortion. See United States v. Jennings, 439 F.3d 604, 612 (9th Cir. 2006); see also United States v. Eaton, 934 F.2d 1077, 1079 (9th Cir. 1991); 9th Cir. Crim. Jury Instr. 8.162. Because § 2113(a) is divisible with respect to these two offenses and Watson and Danielson were convicted of the first offense, we need not de-cide whether bank extortion qualifies as a crime of violence.

Because bank robbery “by force and violence, or by in-timidation” is a crime of violence, so too is armed bank rob-bery. A conviction for armed bank robbery requires proof of all the elements of unarmed bank robbery. United States v. Coleman, 208 F.3d 786, 793 (9th Cir. 2000); see 18 U.S.C. § 2113(d).2 Thus, an armed bank robbery conviction under § 2113(a) and (d) cannot be based on conduct that involves less force than an unarmed bank robbery requires. For that reason, armed bank robbery under § 2113(a) and (d) qualifies as a crime of violence under § 924(c) as well.

AFFIRMED.

2. Section 2113(d) provides: Whoever, in committing, or in attempting to commit, any

offense defined in subsections (a) and (b) of this section, as-saults any person, or puts in jeopardy the life of any person by the use of a dangerous weapon or device, shall be fined under this title or imprisoned not more than twenty-five years, or both.



KRIS KENNY, on behalf of himself and all others similarly situated, Plaintiff-Appellee,

v.WAL-MART STORES, INC.,

a Delaware Corporation; WAL-MART ASSOCIATES, INC., a Delaware Corporation, Defendants-Appellants.

No. 17-56809United States Court of Appeals for the Ninth CircuitD.C. No. 5:17-cv-00967-R-KKAppeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, PresidingArgued and Submitted January 9, 2018 Pasadena, CaliforniaFiled February 1, 2018Before: MILAN D. SMITH, JR. and MICHELLE T. FRIEDLAND, Circuit Judges, and JED S. RAKOFF,* District Judge. Opinion by Judge Milan D. Smith, Jr.

* The Honorable Jed S. Rakoff, Senior United States District Judge for the Southern District of New York, sitting by designation.

COUNSELMark D. Kemple (argued) and Ashley Farrell-Picket,

Greenberg Traurig LLP, Los Angeles, California, for Defendants-Appellants.

David M. deRubertis (argued) and Jeff D. Neiderman, The deRubertis Law Firm APC, Studio City, California; Ellen R. Serbin, Todd H. Harrison, and Brennan S. Kahn, Perona Langer Beck Serbin Mendoza & Harrison APC, Long Beach, California; for Plaintiff-Appellee.

OPINIONM. SMITH, Circuit Judge:

Defendants Wal-Mart Stores, Inc. and Wal-Mart Associ-ates, Inc. (collectively, Wal-Mart) appeal from the district court’s order remanding Plaintiff Kris Kenny’s (Kenny) puta-tive class action to California state court. In a four-sentence minute order, the district court remanded the case sua sponte, stating summarily that Wal-Mart waived its right to remove by filing a demurrer in state court prior to removal.

We disagree, and hold that the district court erred on two grounds. First, the district court exceeded its statutory author-ity in remanding sua sponte based on a non-jurisdictional

defect. Second, Wal-Mart did not waive its right to remove by filing a demurrer in state court, when its right to remove pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), was not ascertainable from Kenny’s pleading. We therefore vacate the district court’s remand order, and remand to that court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

On January 13, 2017, Plaintiff Kris Kenny filed a putative class action Complaint against Defendants Wal-Mart Stores, Inc., Wal-Mart Associates, Inc., and U.S. Healthworks Medi-cal Group,1 in California state court, challenging Wal-Mart’s policy requiring employees who have suffered workplace-related injuries to submit to drug and/or urine testing. Kenny did not serve the Complaint on any of the Defendants.

On February 17, 2017, Kenny filed a First Amended Com-plaint (FAC), and served the FAC on Wal-Mart. Generally, a defendant in a California state court must respond to the complaint within thirty days after service, or risk default. See Cal. Civ. Proc. Code § 471.5. Wal-Mart obtained a fifteen-day extension to respond to the FAC, resulting in a deadline of April 4, 2017.

On April 4, 2017, Wal-Mart filed a demurrer and a motion to strike the FAC. Wal-Mart set the hearing on the demurrer for June 15, 2017. Kenny’s deadline to oppose the demurrer was June 2, 2017, nine court days before the hearing. See id. § 1005(b).

On May 17, 2017, nearly a month before the hearing, Wal-Mart removed the case to federal court, asserting that the district court had jurisdiction over the case pursuant to CAFA. At the time of removal, Kenny had not yet opposed the demurrer, discovery had not begun, and the state court had issued no rulings.

On June 8, 2017, the district court, acting sua sponte, is-sued a four-sentence minute order remanding the action to state court. The district court concluded, without explanation, that Wal-Mart had waived its right to remove the case by filing a demurrer in response to Kenny’s FAC in state court.

Wal-Mart timely petitioned this court for permission to appeal the district court’s remand order. We granted the peti-tion on December 4, 2017.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction to review the district court’s sua sponte remand order pursuant to 28 U.S.C. § 1453(c)(1). See Watkins v. Vital Pharm., Inc., 720 F.3d 1179, 1180–81 (9th Cir. 2013) (per curiam). We review the district court’s remand order de novo. Brinkley v. Monterey Fin. Servs., Inc., 873 F.3d 1118, 1121 (9th Cir. 2017).

1. U.S. Healthworks Medical Group (U.S. Healthworks) is not a party to this appeal. U.S. Healthworks is alleged to have performed the drug and urine tests at issue in the lawsuit.


ANALYSIS

I. THE DISTRICT COURT ERRED IN REMANDING SUA SPONTE BASED

ON A NON-JURISDICTIONAL DEFECT.

A district court lacks authority under 28 U.S.C. § 1447(c) to remand sua sponte based on a non-jurisdictional defect.2 Corona-Contreras v. Gruel, 857 F.3d 1025, 1030 (9th Cir. 2017); see Smith v. Mylan Inc., 761 F.3d 1042, 1044 (9th Cir. 2014). Whereas a “district court must remand ‘if at any time before final judgment it appears that the district court lacks subject matter jurisdiction,’” it “may remand for defects oth-er than lack of subject matter jurisdiction only upon a timely motion to remand.” Smith, 761 F.3d at 1044 (alteration omit-ted) (quoting 28 U.S.C. § 1447(c)). In essence, subject matter jurisdiction is the touchstone for a district court’s authority to remand sua sponte.

Here, the district court erred by remanding sua sponte on a non-jurisdictional ground. Neither the district court nor Ken-ny questioned the court’s subject matter jurisdiction under CAFA.3 Instead, the district court stated, without explanation, that Wal-Mart waived its right to remove by filing a demurrer to Kenny’s FAC in state court. Plainly, waiver, a common-law doctrine, does not implicate the court’s original jurisdiction over the action. See City of Albuquerque v. Soto Enters., Inc., 864 F.3d 1089, 1093 (10th Cir. 2017); cf. Resolution Tr. Corp. v. Bayside Developers, 43 F.3d 1230, 1239 (9th Cir. 1994) (“[T]he jurisdiction exercised by the district court on removal is ‘original’ jurisdiction, without regard to the status of the proceedings in state court prior to removal.”).4 Thus, the dis-trict court exceeded its statutory authority in remanding sua sponte on a non-jurisdictional ground, and its order warrants reversal for this reason alone.

2. Section 1447(c) provides, in pertinent part: A motion to remand the case on the basis of any defect

other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it ap-pears that the district court lacks subject matter jurisdiction, the case shall be remanded. 28 U.S.C. § 1447(c). “The first sentence of § 1447(c) ‘consigns

procedural formalities to the care of the parties,’” while “[t]he second sentence ‘assigns to the court concern for its jurisdictional prereq-uisites.’” Corona-Contreras v. Gruel, 857 F.3d 1025, 1028 (9th Cir. 2017) (quoting Kelton Arms Condo. Owners Ass’n, Inc. v. Homestead Ins. Co., 346 F.3d 1190, 1192 (9th Cir. 2003)). Whereas the former may be waived, the latter may not. See id. at 1028–29.

3. Nor is there any indication at this juncture that subject matter jurisdiction is lacking. Wal-Mart’s notice of removal alleges compli-ance with the requisite elements for CAFA jurisdiction.

4. Kenny’s reliance on Soto Enterprises is misplaced. The district court’s authority to remand sua sponte was not at issue in Soto Enter-prises. See 864 F.3d at 1091 (noting that the plaintiff filed a motion to remand). Furthermore, Soto Enterprises does not conclude that waiver is a jurisdictional defect—indeed, it concludes to the contrary. See id. at 1092–94.

II. THE DISTRICT COURT ERRED IN CONCLUDING THAT WAL-MART

WAIVED ITS RIGHT TO REMOVE THE ACTION.

We have observed that a defendant “may waive the right to remove to federal court where, after it is apparent that the case is removable, the defendant takes actions in state court that manifest his or her intent to have the matter adjudicated there, and to abandon his or her right to a federal forum.” Resolution Tr., 43 F.3d at 1240. Such a waiver “must be clear and unequivocal,” however. Id. (quoting Beighley v. FDIC, 868 F.2d 776, 782 (5th Cir. 1989)). For example, when “a party takes necessary defensive action to avoid a judgment being entered automatically against him, such action does not manifest an intent to litigate in state court, and accordingly, does not waive the right to remove.” Id. Generally speak-ing, “the right of removal is not lost by action in the state court short of proceeding to an adjudication on the merits.” Id. (quoting Beighley, 868 F.2d at 782).

The district court erred in concluding that Wal-Mart waived its right to remove this case when the FAC did not reveal a basis for removal pursuant to CAFA. It is undisputed that the FAC is indeterminate as to the amount in controver-sy.5 Thus, Wal-Mart could not have waived its right to remove by taking actions in state court “after it [was] apparent that the case [was] removable,” id. (emphasis added), when its right to remove was not apparent from the FAC.

A finding of waiver on the facts of this case would run contrary to our case law on removal. We have made clear that we will not “charge defendants with notice of removability until [they have] received a paper that gives them enough information to remove.” Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 1141 (9th Cir. 2013) (quoting Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1251 (9th Cir. 2006)). “[A]s long as the complaint or ‘an amended pleading, motion, order or other paper’ does not reveal that the case is removable,” a defendant, in effect, “may remove at any time.” Rea v. Michaels Stores Inc., 742 F.3d 1234, 1238 (9th Cir. 2014) (per curiam) (quoting 28 U.S.C. § 1446(b)(3)).

We have also emphasized that “a defendant does not have a duty of inquiry if the initial pleading or other document is ‘indeterminate’ with respect to removability.” Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121, 1125 (9th Cir. 2013) (citing Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 693–94 (9th Cir. 2005)). Accordingly, “even if a defen-dant could have discovered grounds for removability through investigation, it does not lose the right to remove because it did not conduct such an investigation and then file a notice

5. “CAFA gives federal district courts original jurisdiction over class actions in which the class members number at least 100, at least one plaintiff is diverse in citizenship from any defendant, and the ag-gregate amount in controversy exceeds $5 million, exclusive of in-terest and costs.” Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1195 (9th Cir. 2015) (citing 28 U.S.C. § 1332(d)). Kenny did not specify an amount in controversy in the FAC.


of removal within thirty days of receiving the indeterminate document.” Id.

These general removal principles apply equally in the con-text of removals premised upon CAFA. See, e.g., Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1180 (9th Cir. 2015) (holding that “a defendant may remove a case from state court within thirty days of ascertaining that the action is re-movable under CAFA, even if an earlier pleading, document, motion, order, or other paper revealed an alternative basis for federal jurisdiction”). In line with these principles, we held in Roth that “a defendant who has not lost the right to remove because of a failure to timely file a notice of removal under [28 U.S.C.] § 1446(b)(1) or (b)(3) may remove to federal court when it discovers, based on its own investigation, that a case is removable” pursuant to CAFA. 720 F.3d at 1123. In short, “[a] CAFA case may be removed at any time, provided that neither of the two thirty-day periods under [28 U.S.C.] § 1446(b)(1) and (b)(3) has been triggered.” Id. at 1126 (citing 28 U.S.C. § 1453(b)).

Here, nothing on the face of the FAC put Wal-Mart on notice of the case’s removability, and Kenny has not pointed to any other paper that would have done so. Under these circumstances, Wal-Mart could not have “clear[ly] and unequivocal[ly]” waived its right to remove by responding to the FAC. Resolution Tr., 43 F.3d at 1240 (quoting Beighley, 868 F.2d at 782).6

Two additional points lend further support for our con-clusion. First, Wal-Mart filed a demurrer on the last day to respond to Kenny’s FAC. See Cal. Civ. Proc. Code § 471.5. While Kenny faults Wal-Mart for filing a response address-ing the merits of the FAC, Kenny cannot dispute the fact that Wal-Mart had to respond in some manner to the FAC, or risk entry of a default judgment. See id. Wal-Mart’s choice to file a demurrer, rather than another form of responsive pleading, to Kenny’s indeterminate FAC did not amount to a waiver of its right to remove.

Second, Wal-Mart removed the case before Kenny op-posed Wal-Mart’s demurrer, and before any hearing was held, let alone any ruling issued. Clearly, Wal-Mart did not “manifest an intent to litigate in state court,” much less an in-tent to affirmatively “abandon [its] right to a federal forum.” Resolution Tr., 43 F.3d at 1240.

For the foregoing reasons, we hold that the district court erred in concluding that Wal-Mart waived its right to remove.

CONCLUSION

We vacate the district court’s order remanding this action to California state court, and remand this action to the district court for further proceedings.

6. We need not decide whether “abusive gamesmanship” by a de-fendant, Roth, 720 F.3d at 1126, may result in waiver of the right to remove. This case does not present such a scenario. There is no indi-cation, for example, that Wal-Mart failed to “promptly investigate[] to determine whether the case was removable,” or “promptly file[] a notice of removal” upon learning, from its own investigation, that the case was removable. Id.

Appellee shall bear the costs on appeal.

VACATED AND REMANDED.



EROTIC SERVICE PROVIDER LEGAL EDUCATION AND RESEARCH PROJECT; K.L.E.S.; C.V.; J.B., Plaintiffs-Appellants,

v.GEORGE GASCON, in his official

capacity as District Attorney for the City and County of San Francisco; EDWARD S. BERBERIAN, JR., in his official capacity as District Attorney of the County of Marin; NANCY E. O’MALLEY, in her official capacity as District Attorney for the County of Alameda; JILL RAVITCH, in her official capacity as District Attorney of the County of Sonoma; XAVIER BECERRA,* Attorney General, in her official capacity as Attorney General of the State of California, Defendants-Appellees.

No. 16-15927United States Court of Appeals for the Ninth CircuitD.C. No. 4:15-cv-01007-JSWFiled February 2, 2018Before: Consuelo M. Callahan and Carlos T. Bea, Circuit Judges, and Jane A. Restani,** Judge.Order

* Xavier Becerra is substituted for his predecessor, Ka-mala Harris. Fed. R. App. P. 43(c)(2).

** The Honorable Jane A. Restani, Judge for the United States Court of International Trade, sitting by designation.

ORDERGOULD, Circuit Judge:

January 17, 2018. The last sentence of the second full paragraph on page 17 of the slip opinion currently reads: “For commercial speech to receive First Amendment pro-tection, however, it must: (1) concern lawful activity and not be misleading; (2) serve a substantial government inter-est; (3) directly advance the governmental interest asserted; and (4) be narrowly tailored. Id. at 566.” That sentence is now replaced with: “For commercial speech to receive First Amendment protection (1) the speech must concern lawful activity and not be misleading; (2) the challenged restric-

tion must serve a substantial government interest; (3) the restriction must directly advance the governmental interest asserted; and (4) the restriction must be narrowly tailored. Id. at 566.”

February 5, 2018 CALIFORNIA DAILY OPINION SERVICE SuPREmE COuRt OF CALIFORNIA 1161

Supreme Court of California


BADRUDIN KURWA, Plaintiff and Appellant,

v.MARK B. KISLINGER et al., Defendants

and Respondents.

No. S234617In the Supreme Court of CaliforniaCt.App. 2/5 B264641Los Angeles County Super. Ct. No. KC045216Filed January 31, 2018

ORDER MODIFYING OPINION ON THE COURT’S OWN MOTION

THE COURT:

The opinion in this matter, which was filed December 18, 2017, and appears at 4 Cal.5th 109, is modified as follows:

The second full paragraph on page 115, beginning “Ulti-mately, we have no occasion,” is deleted and the following paragraph is inserted in its place: Ultimately, we have no oc-casion to resolve the tension between the approaches taken in Hill and Vedanta Society because Kurwa’s appeal from the 2010 interlocutory judgment fails for a more basic reason: Kurwa’s dismissal of his defamation cause of action did not transform the 2010 interlocutory judgment into an appeal-able final judgment and Kurwa has not argued or attempted to explain why the appellate court should have treated the voluntary dismissal as though it were itself an appealable final order. The 2010 interlocutory judgment was not a final judgment because it disposed of less than all of the causes of action. (Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 304 [“ ‘A judgment is final “when it terminates the litigation between the parties on the merits of the case and leaves nothing to be done but to enforce by execution what has been determined.” ’ [Citations.] [¶] Finality in this sense not only makes a judicial determination a judgment, it also makes that judgment appealable.”]; U.S. Financial v. Sullivan (1974) 37 Cal.App.3d 5, 11 [it is improper for the trial court to enter a judgment of dismissal if some causes of action remain pending].)

The third full paragraph on page 115, beginning “Kurwa’s dismissal with prejudice,” is deleted and the following para-graph is inserted in its place: In appealing from that order, Kurwa does not explain how the dismissal of his defamation claim could have retroactively transformed the 2010 inter-locutory judgment concerning the fiduciary duty claims into one that finally disposed of all issues between the parties. And even if Kurwa’s dismissal with prejudice could have

retroactively altered the character of the trial court’s 2010 interlocutory judgment, the Court of Appeal is correct that the time for appealing that judgment has long since expired. (Cal. Rules of Court, rule 8.104(a)(1) [a notice of appeal from a superior court judgment must be filed within 60 days of the notice of entry of judgment or 180 days after judg-ment, whichever is earlier].) To accept Kurwa’s argument would therefore require us to hold that his dismissal of the defamation claim with prejudice not only changed the char-acter of the trial court’s 2010 interlocutory judgment, but also delayed the rendering of that judgment until 2015.

These modifications do not affect the judgment.

February 5, 2018 CALIFORNIA DAILY OPINION SERVICE CALIFORNIA COuRtS OF APPEAL 1162

California Courts of Appeal


JOHN R. LAWSON ROCK & OIL, INC., et al., Plaintiffs and Respondents,

v.STATE AIR RESOURCES BOARD et al.,

Defendants and Appellants.

No. F074003In The Court of Appeal of the State of CaliforniaFifth Appellate District(Super. Ct. No. 14CECG01494)APPEAL from a judgment of the Superior Court of Fresno County. Mark Wood Snauffer, Judge.Filed January 31, 2018

COUNSEL

Xavier Becerra, Attorney General, Robert W. Byrne, Assistant Attorney General, Randy L. Barrow and Nhu Q. Nguyen, Deputy Attorneys General, for Defendants and Appellants.

Wanger Jones Helsley, Timothy Jones, John P. Kinsey, and Steven K. Vote for Plaintiffs and Respondents.

Dorothy Rothrock; Heather Wallace; and Michael Jacob for California Manufacturers & Technology Association, Automotive Specialty Products Alliance, California Business Properties Association, California Chamber of Commerce, California Independent Oil Marketers Association, California Professional Association of Specialty Contractors, California Retailers Association, Consumer Specialty Products Association, National Elevator Industry, Inc., and Pacific Merchant Shipping Association as Amici Curiae on behalf of Plaintiffs and Respondents.

OPINION

OVERVIEWThis case involves modifications to a set of regulations first

adopted in 2008, known as the “Truck and Bus Regulation” (the regulations). In 2014, the State Air Resources Board (the Board) adopted proposed modifications to the Truck and Bus Regulation, extending certain deadlines for small fleet opera-tors to comply with the regulations. John R. Lawson Rock & Oil, Inc. (Lawson), a fleet operator that had already incurred financial liability complying with the regulations, along with a related interest group, the California Trucking Association (collectively respondents), filed a writ petition against the Board and Richard Corey in his official capacity as Executive Officer of the Board (defendants and appellants) alleging the

2014 modifications were improper under both the California Environmental Quality Act (CEQA) and California’s Admin-istrative Procedures Act (APA).

The trial court ultimately ruled in respondents’ favor on both claims. With respect to CEQA, the court concluded the Board made several errors, including approving a project prior to the completion of an environmental study, adopting the wrong baseline for its analysis, incorrectly concluding the modifications would have no significant adverse impact on the environment, and improperly applying a piecemeal approach to the environmental review. With respect to the APA, the trial court found the Board conducted an incom-plete economic impact analysis.

For the following reasons we conclude the trial court cor-rectly determined the Board’s actions violated CEQA. We find, however, that the violations are narrower than found by the trial court. We further find the Board’s conduct violated the APA, voiding the modified regulations. We therefore af-firm the trial court’s judgment on the grounds set forth below.

FACTUAL AND PROCEDURAL BACKGROUND

In January 2010 a regulatory scheme called the Truck and Bus Regulation, first passed in late 2008, became effective. (See Cal. Code Regs., tit. 13, § 2025.) The regulations are designed to reduce emissions of diesel particulate matter (PM), oxides from nitrogen (NOx), and greenhouse gases from large diesel vehicles. It does so, in part, by requiring vehicle owners to retrofit and upgrade existing vehicles to the equivalent of 2010 or newer model year engines.

Shortly before the regulations became effective, staff noti-fied the Board that the ongoing global recession had substan-tially reduced overall trucking activity since the regulations were first envisioned, potentially warranting modifications to the expected regulations. The Board responded by delay-ing some reporting deadlines and requesting proposals for modifications to the regulations. The subsequent proposal resulted in certain modifications to the original regulations that would delay the initial compliance dates by a year and further defer engine replacements by two or more years for most fleets. These changes also eliminated a requirement that certain light trucks utilize a particulate matter filter and pro-vided a 10-year window where only engines 20 years old, or older, would require modernization. The Board notes in its briefing that no legal challenges were filed against these modifications.

The Contested ModificationsIn October 2013, the Board received a status update on

the Truck and Bus Regulation. In this update, the Board was informed that staff had been working with regulated fleets to meet compliance deadlines. Staff reported that, while “the vast majority of the 260,000 trucks registered in California [that] must comply with the requirements of the regulation [were] already compliant,” 20,000 trucks still needed a filter,


of which nearly 15,000 were in small fleets of three or fewer. Staff identified January 1, 2014, as a critical upcoming mile-stone “because it’s the first time at least one vehicle for each of these fleets need[s] to become compliant,” while noting that “small fleets typically have least access to capital, creat-ing additional challenges” toward compliance.

As part of this update, staff identified “what [the Board] is doing to assist fleets in transitioning into compliance as we approach the upcoming compliance date.” Staff pointed to several funding programs available to assist fleets with required modifications and noted “[s]taff is also proposing some new regulatory flexibility to be added to the regula-tion.” As part of this regulatory flexibility, staff indicated it was “proposing to issue a regulatory advisory that would pro-vide fleets that order a [particulate matter] filter or a replace-ment truck or that are eligible and apply for a grant or a loan to have until July 1, 2014, to complete the steps necessary to come into compliance” and stated “because we are planning to make regulatory changes to provide relief, we believe it is appropriate to provide access to these provisions while staff finalizes them to present to the Board by April 2014.” All these proposals were part of what staff described as “a com-prehensive strategy which will help many of [the currently noncompliant] fleets transition into compliant trucks.” Staff explained that, moving forward, “staff will assess the emis-sion and economic impacts of proposed regulatory changes,” and “return to the Board by April 2014 with proposed amend-ments.” In the meantime, staff noted they would issue a regu-latory advisory to allow fleet operators to take advantage of the planned flexibility. Based on this presentation, the Board indicated its staff should examine these changes while some members expressed thanks that flexibility was being built into the regulations.

The Board’s Regulatory AdvisoryIn November 2013, the Board issued the expected Regu-

latory Advisory concerning its plans to modify the current regulations. The Regulatory Advisory described steps the Board “is taking to assist vehicle owners with the transition to the upcoming January 1, 2014, particulate matter . . . filter compliance deadline under the Truck and Bus [R]egulation” and expressed its overall goal as providing “additional time for owners to complete their good faith compliance efforts” and “additional flexibility for many lower use vehicles and vehicles that operate solely in certain areas of the State.” The advisory explained the Board “will recognize good faith ef-forts of vehicle owners to comply with the deadline” then in place by ensuring those meeting relevant criteria “will not be subject to enforcement action during the period through July 1, 2014.”

Truck owners were also allowed “to take advantage of the following anticipated regulatory changes for all vehicles” prior to the expected April 2014 hearing at which the matter would be again discussed. Staff outlined these anticipated changes as: (1) reopening the period for vehicles to opt-in

to the existing low mileage agricultural vehicle extension; (2) reopening the period for vehicles to opt-in to the exist-ing low mileage construction truck extension; (3) reopening the period for vehicles to opt-in to the existing particulate matter phase-in requirements; (4) increasing the thresholds for low-use exemptions; and (5) expanding the definition of “ ‘NOx exempt’ ” areas. Staff also explained that the “PM filter requirements for vehicles operated exclusively in the existing and newly proposed ‘NOx exempt’ areas . . . will be delayed one year until January 1, 2015.” The advisory further explained that “while . . . staff anticipates proposing amend-ments similar to these administrative changes at the Board’s regularly scheduled April 2014 meeting, the changes will not be finalized until approved by the Board.” However, “[i]n the event that the proposed amendments differ from those iden-tified above and impact a fleet’s ability to comply with the regulation, . . . staff will provide fleets that have reported their intent to use these options additional time beyond the Board’s April 2014 meeting to come into compliance.”

The Initial Statement of ReasonsOn March 5, 2014, the Board released a staff report, which

included its Proposed Amendments to the Truck and Bus Regulation and its Initial Statement of Reasons for Proposed Rulemaking (initial statement). The initial statement pro-vided recommendations for modifications in line with those discussed at the October 2013 meeting and, relevant to this appeal, included distinct subsections discussing air quality, the environmental impacts analysis, and the economic im-pacts analysis and assessment. With respect to the disputed modifications, the initial statement sought to provide relief in areas with cleaner air by delaying the compliance schedule for all vehicles operating solely within certain exempt areas by one year for initial compliance and four years for final compliance. For small fleets outside of these areas, staff pro-posed “to defer the compliance requirements for the second and third truck in a small fleet by one year and two years, respectively. . . .” No changes were recommended regarding the first truck “because the January 1, 2014[,] compliance date has passed and many small fleet owners have already complied.”

For fleets that had already complied with the prior par-ticulate matter regulations, staff recommended extending the time they could use existing particulate matter retrofits, ex-tending the use of credits with respect to the use of particulate matter filters, and allowing operators to continue operating if retrofitted particulate matter filters are recalled, all of which generally extended relevant deadlines for complying fleets. The credit program generally allowed trucks fitted with com-pliant particulate matter filters prior to 2012 to count against other trucks in the fleet that would otherwise need to be up-graded until the new deadlines were reached. The changes would also delay the point at which trucks outfitted with a particulate matter filter prior to 2014 would have to upgrade their engine to a 2010 model level.


The air quality section of the initial statement identified several reasons why reducing diesel particulate matter and black carbon—“a major constituent of diesel [particulate matter]”—was important nationally and locally, particular-ly in the South Coast and San Joaquin Valley regions. This section also included updated information about the types of trucks subject to regulation and their use in California. In conjunction with Appendix F to the initial statement, the air quality section explained that current pollution estimates now included “up-to-date (2013) fuel sales and use data,” the “latest nationwide truck sales projected in the Annual Energy Outlook,” improved matching of engine and truck model years from prior estimates, and updated informa-tion “on how truck owners are actually complying” with the previously passed regulations. The air quality section then provided several charts showing how oxides of nitrogen and particulate matter emissions would decrease from the cur-rent levels estimated under the updated methodology and compared those reductions to the estimated reductions if the current regulations were left in place. As one example of how this data was presented, the below chart shows how the current data regarding particulate matter emissions (marked as the “Without Truck and Bus Regulation” line) compares to the data “With Adopted Regulation” and “With Proposed Amendments.”

[ IMAGE DELETED ]

The environmental impact analysis section disclosed the staff’s opinion “that implementing the proposed amendments to the regulation would not result in an adverse impact on the environment” and explained the staff’s process for making this determination. In discussing air quality benefits under this section, the initial statement noted that “staff projects a temporary delay in some emission benefits in the near term (until 2020) compared to emission benefits that may have been achieved absent the proposed amendments,” but found that impact “minimized by the fact that overall emis-sions continue to be lower than originally expected due to the continued effects of the economic downturn.” The initial statement then referred to the air quality section for further details. Reaching the heart of its conclusion, the initial state-ment then explained, “The amendments only change the mid-term timing of clean-up of the truck fleet and, therefore, do not result in any increase in emissions compared to existing environmental conditions. Also, despite the projected near-term delay in some emissions benefits . . . emissions . . . will continue to drop from today’s levels as a result of the regula-tion with the proposed amendments and it will ultimately result in the same projected air quality benefits.” In simi-lar language, when discussing “ ‘NOx exempt areas,’ ” the initial report stated, “Although emissions would not decline as rapidly, in these regions, trucks that travel in these areas would continue to meet the full requirements of the regula-

tion and both NOx and PM emissions will continue to de-cline. Since there is no longer a need to substantially decrease NOx emissions in these attainment areas, no adverse impacts to air quality would occur . . . .” Ultimately, the section con-cluded that because “no significant adverse environmental impacts were identified, this environmental analysis does not include a discussion of mitigation measures or environmental alternatives.”

Finally, the economic impacts analysis and assessment section claimed to discuss “the effect of the proposed amend-ments on individual fleet owners and businesses affected by the regulation.” It generally concluded that the amendments “would reduce compliance costs for many fleet owners” by allowing “fleet owners more time to make the required upgrades, thereby providing time for used compliant truck prices to naturally decline.” The section then discussed nu-merous expected costs, including vehicle price and replace-ment costs, retrofitting particulate matter filter costs, and other similar matters associated with the regulations. Within these analyses, staff considered things such as differences in impact between in-state and out-of-state fleets, differences in impact on high-mileage fleets, and annual operational, main-tenance, and reporting costs. The section further considered the specific impact the modifications had on small businesses within California, noting “the proposed amendments would not impose any additional costs on small businesses, and should result in small businesses, many of them small fleets, being able to spread out” their compliance costs. At the same time, the section explained “the [amendments] could have a negative economic impact on retrofit manufacturers and installers,” among others.

As part of the economic analysis, staff completed a Stan-dardized Regulatory Impacts Assessment (standardized as-sessment or SRIA), which was ultimately submitted to the Department of Finance for review and approval. Included within this assessment was a discussion of costs and cost sav-ings arising from the proposed amendments. In its discussion on the costs and cost savings for businesses, staff conclud-ed, “The businesses required to comply are throughout the state of California, while all regulated businesses can benefit from the compliance delays, the businesses that have already complied would not be affected.” The report did not identify any analysis supporting this conclusion. In a later section on macroeconomic impacts, the assessment looked at com-petitiveness and job impacts in California, among other fac-tors. Here, when discussing competiveness, the assessment focused on “competitive advantage[s] of businesses outside of California to those in California” and found “no direct im-pact on competitiveness.” The report noted that, while some businesses “have indicated that the compliance requirements would negatively impact their ability to achieve the necessary profits to stay in business,” the amendments were designed “to provide the flexibility necessary to ensure these business-es are not eliminated” and the “strategy will be beneficial for California due to a favorable change in the trade balance be-


tween California and the rest of the world . . . .” With respect to job impacts, the assessment found there would “be no net loss in jobs over the life of the proposed Amendments,” while noting there may be an immediate lower demand for trucks and exhaust retrofit devices, resulting in some job losses for those service providers.

Comments, Responses, and ApprovalsFollowing release of the initial statement, the Board so-

licited and received public comments on its proposals. These comments included several from Lawson, which raised the issues litigated in this matter.

On April 24, 2014, the Board held another public meet-ing, at which time it was updated on the status of its pro-posed modifications. In that presentation, staff recommended adopting the proposed modifications with several non-sub-stantive changes requiring a 15-day public comment period under the APA. The Board adopted this recommendation and initially approved the modified regulations by way of Reso-lution 14-3, on April 25, 2014. As part of this approval, the Board approved and released written responses to comments on the environmental impacts analysis related to the modified regulations, rejecting all public criticisms of the document.

When providing the 15-day comment period, and a second 15-day comment period required after additional changes were made that increased compliance times for the second truck in a small fleet, among other matters, the Board noted that staff “has determined that these modifications do not change implementation of the regulation in any way that al-ters any of the conclusions of the environmental analysis . . . included in the Staff Report released on March 5, 2014,” and that the “modifications do not cause any changes that alter the air quality emissions assessment or otherwise result in any other significant adverse environmental impacts . . . .”

Following these comment periods, the Board held another public meeting and received another update on the modifica-tions. The staff update noted the original environmental anal-ysis found no adverse environmental impacts and the 15-day changes did not alter that conclusion. Staff noted additional environmental comments had been received and responded to and recommended reaffirming the Board’s finding of no adverse environmental impact and adopting the final regula-tion order.

On November 20, 2014, the Board issued Resolution 14-41, adopting the final regulation order for the modified regu-lations and the written responses to the environmental and economic comments previously discussed. In line with this action, the Board issued its Final Statement of Reasons for Rulemaking, which incorporated the initial statement and provided written responses to all the comments received from the public. Included in these comments were dozens of assertions that the proposed modifications were harmful to fleets that had already complied with the prior regulations. In response to these comments, the Board wrote it “was con-cerned with small fleets, lower mileage fleets, and fleets in

rural areas with cleaner air, all which arguably continue to be impacted by the recession and are challenged in comply-ing with the regulation. In considering changes, the Board carefully considered various options to find the best balance in providing additional flexibility for such fleets while mini-mizing the impacts to compliant fleets and retaining the air quality benefits of the regulation. [The Board] recognizes that to those fleets that have already made investments to comply, providing additional flexibility can be viewed as un-fair. However, most of the amendments were structured in a manner that would minimize the impact on such fleet own-ers that compete in the same markets. The amendments also included changes that reward fleets that have acted early and have already complied.” The Board then pointed to responses to multiple related comments to support this claim. These ad-ditional responses included statements suggesting the Board considered the alleged impacts, such as, “The Board deter-mined the amended regulation achieves the appropriate bal-ance in addressing concerns about competitive disadvantage and protecting public health while still meeting air quality obligations.” The Board also suggested it did not make cer-tain changes to avoid significant competitive disadvantage concerns, writing “The Board determined that it was not ap-propriate to expand the definition [of certain work trucks] to include tractor-trailers because the amendments would no longer meet air quality objectives, and would create competi-tive disadvantage concerns among most for-hire fleets.”

The Present ProceedingsOn May 23, 2014, respondents filed their initial petition

for a writ of mandate and complaint for declaratory and in-junctive relief based on the Board’s conduct to that point. The petition and complaint was amended in July 2014 and faced a quick demurrer on the grounds that the regulatory proceed-ings were not complete. On December 23, 2014, after the Board issued its final approval, respondents filed a second amended petition and complaint, which remains the opera-tive pleading in this case.

The trial court held hearings on September 18 and Octo-ber 16, 2015, before issuing its Final Statement of Decision on June 7, 2016. The trial court first concluded the Board engaged in post hoc environmental review by approving amendments before the environmental review process was complete. The court reasoned the Board began carrying out and implementing the proposed amendments as early as No-vember 2013, and the Board’s April 25, 2014, approval was also premature given that additional environmental review remained. The court next found the Board should have pre-pared the functional equivalent of an environmental impact report (EIR), rather than adopt the proposed equivalent of a negative declaration, because a fair argument existed in the record that the amendments would have a significant effect on the environment. The court found substantial evidence showed potential increases in oxides of nitrogen, particu-late matter, and greenhouse gases. In addition to these find-


ings, the court also concluded the Board adopted an incor-rect baseline for determining impacts on the environment because it did not utilize as a baseline measurement, “what would obtain under the unmodified 2010 Amendments” and instead used “the current conditions obtaining due to lack of enforcement of the 2010 Amendments.” The court rejected the notion that a negative declaration could be utilized in the future in light of the fact “the criteria pollutant emissions caused by the Amendments vastly exceed[ed] the thresholds of significance” for oxides of nitrogen and particulate matter. Finally, the court found the Board had also violated the APA by utilizing a materially deficient economic impact analysis. The court found that, despite numerous comments on the issue of competitive impacts on compliant fleets, “there is no analysis in either the SRIA or the Fiscal Statement of the impacts to compl[ia]nt trucking companies being undercut in the market by non-compliant trucking companies due to the Amendments.”

Based on these findings, the trial court granted respon-dents’ writ petition, voided the Board’s approval of the 2014 Amendments to the Truck and Bus Regulation and certifi-cation of the environmental documents related to the 2014 Amendments, and issued a peremptory writ of mandamus to the Board ordering it “to comply with CEQA and the APA before taking any further action to approve, implement or en-force the 2014 Amendments.” The court denied respondents’ request for declaratory relief and awarded respondents their fees and costs.

This appeal timely followed.

DISCUSSION

Alleged CEQA Violations

The underlying writ petition includes multiple allegations of error under CEQA. Although we need not reach every allegation, our ultimate finding of CEQA error requires us to consider several alleged errors in order to ensure future compliance with CEQA should the Board continue to pur-sue modifications to the current regulations. Accordingly, we begin by identifying some basic CEQA principles, before analyzing those alleged errors.

CEQA and the Board’s Regulatory Program

The Board is not subject to the full scope of CEQA. Rath-er, it utilizes its own regulatory program when adopting or amending standards for the protection of ambient air quality. This process is permitted under the law as a certified regula-tory program. (See Pub. Resources Code, § 21080.5; Cal. Code Regs., tit. 14, §§ 15250-15252.) Such programs are exempt from certain procedural aspects of CEQA because “they involve ‘the same consideration of environmental issues as is provided by use of EIRs and negative declara-tions.’ ” (POET, LLC v. State Air Resources Bd. (2013) 218 Cal.App.4th 681, 709 (POET I).) Certification of a program

is effectively a determination that the agency’s regulatory program includes procedures for environmental review that are the functional equivalent of CEQA. (Californians for Al-ternatives to Toxics v. Department of Pesticide Regulation (2006) 136 Cal.App.4th 1049, 1059.) “The practical effect of this exemption is that a state agency acting under a certi-fied regulatory program need not comply with the require-ments for preparing initial studies, negative declarations or EIR’s. [Citations.] The agency’s actions, however, remain subject to other provisions of CEQA.” (POET I, supra, 218 Cal.App.4th at p. 710.)

The Board’s “regulatory program is contained in sections 60005, 60006 and 60007 of title 17 of the California Code of Regulations. These provisions require the preparation of a staff report at least 45 days before the public hearing on a proposed regulation, which report is required to be available for public review and comment. (Cal. Code Regs., tit. 17, § 60005, subd. (a).) It is [the Board’s] policy ‘to prepare staff reports in a manner consistent with the environmental protec-tion purposes of [the Board’s] regulatory program and with the goals and policies of [CEQA].’ (Cal. Code Regs., tit. 17, § 60005, subd. (b).) The provisions of the regulatory pro-gram also address environmental alternatives and responses to comments to the environmental assessment. (Cal. Code Regs., tit. 17, §§ 60006, 60007.)” (POET I, supra, 218 Cal.App.4th at p. 710.)

Although the Board follows slightly different procedures, we analyze the Board’s conduct for compliance with CE-QA’s policies and legal mandates. (POET I, supra, 218 Cal.App.4th at p. 711.)

General Standards of ReviewIn reviewing an agency’s compliance with CEQA during

the course of its legislative or quasi-legislative actions, the trial court’s inquiry during a mandamus proceeding “ ‘shall extend only to whether there was a prejudicial abuse of discretion,’ ” which is established “ ‘if the agency has not proceeded in a manner required by law or if the determina-tion or decision is not supported by substantial evidence.’ ” (Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 426 (Vineyard), citing Pub. Resources Code, § 21168.5.) We apply the same standard when reviewing a substitute environmental docu-ment for a certified regulatory program. (POET I, supra, 218 Cal.App.4th at pp. 712-713; California Sportfishing Protec-tion Alliance v. State Water Resources Control Bd. (2008) 160 Cal.App.4th 1625, 1644 (California Sportfishing).)

“In evaluating an EIR [or substitute environmental docu-ment] for CEQA compliance, . . . a reviewing court must adjust its scrutiny to the nature of the alleged defect, depend-ing on whether the claim is predominantly one of improper procedure or a dispute over the facts.” (Vineyard, supra, 40 Cal.4th at p. 435.) When the claim is predominantly one of procedure, courts conduct an independent review of the agen-cy’s action, but when a challenge is made to a factual finding


of the agency, we will review the record to determine whether the finding is supported by substantial evidence. (POET I, supra, 218 Cal.App.4th at p. 713.) When the informational requirements of CEQA have not been met, an agency has failed to proceed in a manner required by law and has there-fore abused its discretion. (California Sportfishing, supra, 160 Cal.App.4th at p. 1644.) In assessing such a claim, courts apply an independent or de novo standard of review to the agency’s action. (Communities for a Better Environment v. City of Richmond (2010) 184 Cal.App.4th 70, 83.)

On appeal, we review the agency’s action rather than the trial court’s ruling, applying the same standard as the trial court. (Vineyard, supra, 40 Cal.4th at p. 427.) “We therefore resolve the substantive CEQA issues . . . by independently determining whether the administrative record demonstrates any legal error by the [agency] and whether it contains sub-stantial evidence to support the [agency’s] factual determina-tions.” (Ibid.)

The Board’s Approval of the ModificationsAlthough the Board is not subject to the full extent of

CEQA regulations when utilizing its certified regulatory program, it is subject to various CEQA principles relevant to its regulatory actions. One of these principles is the expecta-tion that CEQA documents, and by extension CEQA compli-ant documents like the Board’s staff report, “be considered before project approval.” (POET I, supra, 218 Cal.App.4th at p. 716.) As explained in the CEQA Guidelines, “public agencies shall not undertake actions concerning the proposed public project that would have a significant adverse effect or limit the choice of alternatives or mitigation measures, before completion of CEQA compliance.” (CEQA Guide-lines1, § 15004, subd. (b); see Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, 394 [“A fundamental purpose of an EIR is to provide decision makers with information they can use in deciding whether to approve a proposed project, not to inform them of the environmental effects of projects that they have al-ready approved. If postapproval environmental review were allowed, EIR’s would likely become nothing more than post hoc rationalizations to support action already taken.”]) The Board is subject to this same timing requirement. (POET I, supra, 218 Cal.App.4th at p. 717 [“[W]e conclude that certi-fied regulatory programs, while exempt from certain require-ments of CEQA, are not exempt from the timing requirement in Guidelines section 15004.”].)

The parties dispute whether the Board satisfied this timing requirement. According to respondents, the Board took two distinct steps that committed it to a definite course of action with respect to the proposed modifications. First, respondents contend the Board violated CEQA when its staff issued Reg-ulatory Advisory 13-28 in November 2013. Respondents ar-

1. “CEQA Guidelines” refers to the regulations that implement CEQA and are set forth in California Code of Regulations, title 14, section 15000 et seq.

gue the Board necessarily limited its choice of alternatives or mitigation measures and committed itself to a definite course of action on the modifications when it issued an advisory telling fleet owners they could “ ‘report and take advantage of applicable anticipated regulatory changes.’ ” Second, re-spondents see a CEQA violation at the time the Board first approved the Amendments at the April 25, 2014, meeting. Respondents posit that the Board’s CEQA review was not complete, according to regulatory rules, until the Board filed a Notice of Decision, which did not occur until November 2014, and that the approval in April 2014 included language demonstrating the environmental review was ongoing.

The Board disagrees. With respect to its conduct in issuing the Regulatory Advisory, the Board argues the advisory itself was not a project and did not bind the Board to adopting the proposed amendments or preclude consideration of alterna-tives. Rather, the Board states that it “was simply allowing vehicle owners an opportunity to report their intent to use amended provisions if they became available and be eligible for some delay in enforcement, if they reported that intent,” conduct the Board contends is perfectly acceptable given its inherent discretion “to determine where, when, and how to utilize its enforcement resources.” It further suggests any er-ror at this stage is “moot and irrelevant because by the time the writ petition was filed, [the Board] did in fact conduct the full CEQA review of the proposed regulatory modifications.” On the matter of its April 2014 approval, the Board’s position is that it met all CEQA requirements prior to the April 2014 approval and that respondents are mistaking routine boiler-plate language in its notice of approval for an admission that further environmental review was applicable. The Board as-serts no further CEQA analysis was required after that point and further meetings were held only to comply with certain requirements of the APA.

The Board Violated CEQA by Approving a Project Too Early

We begin with analyzing the Board’s conduct when issu-ing the Regulatory Advisory. We ultimately find this action constituted the approval of a project under CEQA. Contrary to the framework of the Board’s arguments, the project in this instance was not the advisory, but the proposed regulatory modifications. The Board’s issuance of a public Regulatory Advisory stating that fleet operators could take advantage of the proposed regulatory modifications before they were enacted, and would not be subject to enforcement actions or penalties if those modifications were not enacted, is suf-ficient conduct to constitute approval of those regulations under CEQA. As the required environmental review was incomplete at the time of the CEQA project approval, the Board violated CEQA’s timing requirement.

A project is a broad concept under CEQA that asks wheth-er certain entities’ activities “ ‘may cause either a direct phys-ical change in the environment, or a reasonably foreseeable indirect physical change in the environment.’ ” (Friends of


the Sierra Railroad v. Tuolumne Park & Recreation Dist. (2007) 147 Cal.App.4th 643, 653.) Analogous to this case, “[t]his means that agency action approving or opening the way for a future development can be part of a project and can trigger CEQA even if the action takes place prior to planning or approval of all the specific features of the planned devel-opment.” (Id. at p. 654.) This “opening the way” can trigger CEQA where it constitutes an approval.

Although we agree with the Board that issuing the Regula-tory Advisory itself did not constitute a project, this does not end our inquiry. The modification of current regulations may constitute a project. (POET, LLC v. State Air Resources Bd. (2017) 12 Cal.App.5th 52, 73-74 (POET II).)

Prior to issuing the Regulatory Advisory, staff identi-fied proposed modifications to the current framework of the Truck and Bus Regulation, modifications it called a com-prehensive compliance strategy. The Board and its staff then indicated their intent not to prosecute those that failed to comply with the current controlling regulations if they iden-tified their intent to comply with the expected proposal. The potential modifications were sufficiently detailed to allow staff to indicate they would quickly present modifications based on their presented outline to the Board and could rely on that outline as a basis for choosing not to enforce the pres-ent regulations. Such a plan is certainly detailed enough to constitute a project which cannot be approved without CEQA compliance. (See Save Tara v. City of West Hollywood (2008) 45 Cal.4th 116, 130 (Save Tara) [noting an EIR may not “be delayed beyond the time when it can, as a practical matter, serve its intended function of informing and guiding deci-sion makers”].) Thus, under CEQA’s timing requirement, we must consider whether the Board improperly approved this project prior to the completion of the required environmental analysis.

While the Board contends no project approval could exist prior to the formal approval from the Board, this is not cor-rect. An approval under CEQA is “the decision by a public agency which commits the agency to a definite course of ac-tion in regard to a project intended to be carried out by any person.” (CEQA Guidelines, § 15352, subd. (a).) “Gener-ally speaking, an agency acts to approve a proposed course of action when it makes its earliest firm commitment to it, not when the final or last discretionary approval is made.” (North Coast Rivers Alliance v. Westlands Water Dist. (2014) 227 Cal.App.4th 832, 859, italics omitted.) Approvals under CEQA, therefore, are not dependent on “final” action by the lead agency, but by conduct detrimental to further fair envi-ronmental analysis.

Our Supreme Court provided an extensive analysis of this principle with respect to public/private development agree-ments in Save Tara. In that case, the city council for West Hollywood entered into a development agreement that was contingent on later CEQA review and other regulatory ap-provals. (Save Tara, supra, 45 Cal.4th at pp. 123-124.) The court found this agreement violated CEQA’s timing require-

ment, noting in its analysis that the agreement included a loan not conditioned on CEQA compliance, that the city had made several statements suggesting it was committed to the project (Save Tara, supra, at pp. 140-142), and that the “[c]ity [had] proceeded with tenant relocation on the assumption the property would be redeveloped as in the proposed proj-ect” (id. at p. 142).

In its discussion regarding the general principles of CE-QA’s timing requirement, the Supreme Court explicitly re-jected the city’s argument that approval could not occur until the relevant agency entered into an unconditional agreement irrevocably vesting development rights. (Save Tara, supra, 45 Cal.4th at p. 134.) In language pertinent to this case, the court noted it had previously found approval “even though further discretionary governmental decisions would be need-ed before any environmental change could occur” (ibid.) and explained that limiting approval to unconditional agreements would ignore situations where bureaucratic and financial mo-mentum had built irresistibly behind a proposed project, cre-ating a strong incentive to ignore environmental concerns. (Id. at p. 135.) Notably, however, the court also rejected the idea that any agreement, conditional or not, would constitute approval, stating specifically that approval “cannot be equat-ed with the agency’s mere interest in, or inclination to sup-port, a project, no matter how well defined.” (Id. at p. 136.) Balancing these positions, the court concluded the proper test for determining whether a project had been prematurely approved was whether the agency had taken any action that significantly furthered a project “ ‘in a manner that forecloses alternatives or mitigation measures that would ordinarily be part of CEQA review of that public project,’ ” including “the alternative of not going forward with the project.” (Id. at pp. 138-139.) The court instructed reviewing courts to look “not only to the terms of the agreement but to the surrounding cir-cumstances” when making this determination. (Id. at p. 139.)

The core principles set forth in Save Tara equally apply to public regulatory action, such as the proposed amendments at issue here. (POET I, supra, 218 Cal.App.4th at p. 719.) While the facts shedding light on the agency’s rule-making process will be different from those arising when an agency approves a development agreement, such differences are immaterial to the core issue whether the agency has taken any steps fore-closing alternatives, including that of not going forward, or has otherwise created bureaucratic or financial momentum sufficient to incentivize ignoring environmental concerns.

Under that standard, we conclude the Board did take ac-tion that significantly furthered the proposed regulations in a manner that foreclosed the alternative of not modifying the regulations. As the Board notes in its briefing, it was updat-ed on issues regarding full implementation of the existing regulations in October 2013. At that time it was informed compliance was required by January 1, 2014, and that many small fleets were facing economic challenges in meeting this deadline. In response to this information, the Board directed its staff to propose modifications to the regulations. While


such conduct certainly built momentum behind a change to the regulations, such momentum was well in line with Save Tara’s reminder that agencies may express interest in or even inclination toward proposed projects.

However, shortly after providing those instructions, staff responded, in November 2013, with draft modifications and an advisory to the public regarding the proposal. While the advisory informed the public that further action by the Board was necessary to implement any changes, and warned that the Board and staff may propose amendments, it expressly stated that, should modifications occur that “impact a fleet’s ability to comply with the regulation, [the Board’s] staff will provide fleets that have reported their intent to use these options ad-ditional time beyond the Board’s April 2014 meeting to come into compliance.” Thus, at the point of the November 2013 advisory, the Board, through its staff’s statements, had con-firmed it intended to change the current regulations and that it would not prosecute any fleet operator that failed to comply with those 2014 regulations between January 1, 2014, and the April 2014 board meeting. In related public comments, mem-bers of the Board were already expressing their gratitude for the forthcoming “flexibility” to the regulations.

We conclude such conduct qualifies as approval of the modified regulations under CEQA. While the Board had pre-viously expressed an inclination to modify the regulations, its advisory made clear that, at some level, changes were com-ing. It thus put substantial momentum behind supporting the changes offered by staff, as written, even if it retained a stated authority to modify those recommendations. This momen-tum was further buttressed by an express and public confir-mation that the regulations as currently drafted would not be enforced. This expression of intent wholly precluded any potential “not going forward” option, as even if the Board found a reason not to make changes it would have already delayed implementation of the regulations as written by at least four months, thereby ensuring that at least some reduc-tion in environmental impact under the pending regulations would not occur.

The Board argues that such a conclusion cannot stand be-cause the Board was merely exercising its well-settled pow-ers of prosecutorial discretion with respect to regulatory en-forcement. Noting there is no case law on record suggesting the Board’s “exercise of its prosecutorial discretion is con-strained by CEQA,” the Board argues there “is no evidence in the record that this temporary forbearance was likely to have any impact on the environment or otherwise constitut-ed a project under CEQA.” This argument is fundamentally flawed. Our conclusion in this matter does not add new limits to the Board’s exercise of prosecutorial discretion, rather it enforces the limits CEQA places on all Board actions that approve projects under that overarching law. This is no dif-ferent than occurred in Save Tara, where the agency was utilizing its uncontested authority to enter into contracts but did so in a manner that improperly approved a project under CEQA. (Save Tara, supra, 45 Cal.4th at p. 140.) It is, like-

wise, no different from how the board prematurely approved the Low Carbon Fuel Standard in POET I even though the board-approved modifications were subject to further com-ment and potential change. (POET I, supra, 218 Cal.App.4th at pp. 722-726.) In all such cases, there is no curtailment to the agency’s ability to use a power generally. Rather, the law requires the agency to consider when it can properly use that power such that it does not purposefully or inadvertently sidestep the mandatory provisions of CEQA.

As the Board cited in its own briefing, “[a] decision to devote available facilities and personnel to selected areas and to abstain from active pursuit of others is a policy or planning decision at a relatively high internal level.” (Ros-eville Community Hosp. v. State of California (1977) 74 Cal.App.3d 583, 590.) To ignore the impact of such a high level policy decision in analyzing approval under CEQA would directly contradict our Supreme Court’s guidance in Save Tara to review not only the specific actions taken but also the surrounding circumstances when considering approval of a project. (Save Tara, supra, 45 Cal.4th at p. 139.) Whether such additional circumstances have any independent impact on the environment or otherwise constitute a project is a true red herring. The sole question under the law is whether some action constituted approval of a CEQA project. The project here is the ultimate modification of the Truck and Bus Regu-lation. Thus, the only relevant question is whether the Board took meaningful steps in support of that project, thereby fore-closing alternatives. As noted above, in this case we conclude such steps were taken prior to the Board conducting its envi-ronmental analysis, violating CEQA.2

Remedy for Early Approval“Directing an agency to void its approval of the project

is a typical remedy . . . for a CEQA violation.” (POET I, supra, 218 Cal.App.4th at p. 759.) This is what the mandate issued by the trial court ordered, along with a direction that the Board “comply with CEQA and the APA before taking any further action to approve, implement or enforce the 2014 Amendments.” The parties do not dispute that affirming the trial court supports voiding the approval of the modifications under CEQA. However, the Board raised as an issue whether it would be required to prepare the functional equivalent of an EIR under the trial court’s Final Statement of Decision.

We conclude that, to the extent the trial court intended to specifically order the preparation of the functional equivalent of an EIR, it erred. We note, however, that the court’s actual judgment imposes no direct requirement to do so. We con-sider this issue, however, based on the parties’ competing interpretations.

2. Having concluded the Board improperly approved this CEQA project at the time it issued its Regulatory Advisory, we do not further consider whether its actions on April 25, 2014, also prematurely ap-proved the modifications. Further, we need not reach whether improp-er piecemeal review occurred, as the initial approval was improper standing alone.


Public Resources Code section 21168.9 controls the court’s authority when crafting a remedy for CEQA viola-tions. (Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1121 (Berkeley Hillside Preserva-tion).) Under this statute, upon finding a CEQA violation, “a court should enter an order that includes (1) a mandate that the decision be voided in whole or in part, and/or (2) a man-date that the agency ‘take specific action as may be neces-sary to bring the . . . decision into compliance with’ CEQA.” (Berkeley Hillside Preservation, supra, at p. 1121.) However, “subdivision (c) of [Public Resources Code] section 21168.9 provides in part that ‘[n]othing in this section authorizes a court to direct any public agency to exercise its discretion in any particular way.’ ” (Id. at p. 1122.) Thus, where no discre-tion remains for the agency, courts have properly instructed them to prepare an EIR when required. (Id. at p. 1121; see Save Tara, supra, 45 Cal.4th at p. 143.) However, where the agency retains discretion on how to proceed under CEQA de-spite its previous violations, it may exercise that discretion on remand. (Berkeley Hillside Preservation, supra, 60 Cal.4th at p. 1122.) Thus, courts can order an EIR only where, under the circumstances of that case, the agency lacks discretion to proceed in a different fashion. (Ibid.)

In this case, we do not believe the Board lacks discre-tion to act in compliance with CEQA without generating the functional equivalent of an EIR.3 As the Board notes, it may choose to revert to the prior regulatory scheme, effectively choosing the no project option. In addition, in light of its analysis of the errors identified below, it remains possible the Board could issue something similar to a mitigated negative declaration or could modify the regulations in a manner that avoids the environmental impacts identified by respondents. The trial court’s judgment accounts for this possibility, sim-ply directing the Board to comply with CEQA and the APA as it exercises its discretion moving forward. We affirm that understanding of the judgment.

The Board’s Choice of a BaselineAlthough the Board’s early approval requires that we void

approval of the contested modifications, as we have noted the Board may continue to pursue those or similar modifica-tions. As such, we turn to the actual environmental analysis completed to determine whether it ultimately complied with CEQA. In this review, the parties first dispute whether the Board adopted a baseline determination of the environmental conditions absent the proposed project that is consistent with CEQA.

3. We accept the Board’s concession that it is obligated to proceed to the functional equivalent of an EIR if it “decided to re-adopt the amendments without any modifications using the exact same record.” Moreover, in light of the errors identified below, we do not agree that the Board’s later approval of the modifications permits us to overlook any other errors in this case. (See POET I, supra, 218 Cal.App.4th at pp. 759-760.)

Standards of Review and Applicable Law

The baseline determination is an important component of the CEQA process, as it sets the criterion by which the agen-cy determines whether the proposed project has a substantial adverse effect on the environment. (POET II, supra, 12 Cal.App.5th at p. 78.) We review de novo whether an agency has chosen to rely upon a standard that is consistent with CEQA. (Communities for a Better Environment v. South Coast Air Quality Management Dist. (2010) 48 Cal.4th 310, 319 (Com-munities); Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204, 219 (Center for Bi-ological Diversity).) Once that standard is set, “an agency enjoys the discretion to decide, in the first instance, exactly how the existing physical conditions without the project can most realistically be measured, subject to review, as with all CEQA factual determinations, for support by substantial evi-dence.” (Communities, supra, 48 Cal.4th at p. 328; Neighbors for Smart Rail v. Exposition Metro Line Construction Author-ity (2013) 57 Cal.4th 439, 449 (Neighbors).)

The Board Selected an Appropriate Baseline

The arguments presented on appeal walk a tightrope be-tween the two standards of review noted above. Both par-ties agree, consistent with the case law, the Board should normally adopt as a baseline “the physical environmental conditions in the vicinity of the project, as they exist . . . at the time the environmental analysis is commenced . . . .” (CEQA Guidelines, § 15125; see Communities, supra, 48 Cal.4th at p. 321 [“[T]he impacts of a proposed project are ordinarily to be compared to the actual environmental conditions existing at the time of CEQA analysis, rather than to allowable condi-tions defined by a plan or regulatory framework.”].) Howev-er, according to respondents, the Board “did not employ this standard to its environmental analysis” because it “created a fictional universe in which the Existing Regulations did not exist,” measuring the current environment without regard to expected reductions in future pollution based on the existing regulations.

Regardless of where the arguments fall specifically, we do not agree with respondents that the Board either adopted a baseline that was inconsistent with CEQA or erroneously measured the existing conditions by excluding future expect-ed declines. Rather, we conclude the Board was within its discretion to adopt a baseline calculation that measured the current environment without further reducing figures based on regulations that should have taken effect during the course of the analysis.

Communities provides strong support for our conclusion. Like our case, Communities involved an agency issuing a negative declaration. However, in that case, the declaration arose because the baseline chosen for the project was the operation of certain boilers at their full permitted operational levels, despite the fact simultaneous maximum operation was not a realistic description of the existing conditions at


the time. (Communities, supra, 48 Cal.4th at p. 322.) As we noted above, the Supreme Court explained “that the impacts of a proposed project are ordinarily to be compared to the ac-tual environmental conditions existing at the time of CEQA analysis, rather than to allowable conditions defined by a plan or regulatory framework.” (Id. at p. 321, italics added.) This was so because “[a]n approach using hypothetical allowable conditions as the baseline results in ‘illusory’ comparisons that ‘can only mislead the public as to the reality of the im-pacts and subvert full consideration of the actual environ-mental impacts,’ a result at direct odds with CEQA’s intent.” (Id. at p. 322.)

In line with Communities, the administrative record in this case demonstrates that full compliance with the existing regulatory standards would also create an illusory compari-son. The record basis for proposing a delay in the regulatory mandates was the recognized fact that limitations in credit and capital had left many small fleet operators unable to comply with the standards as written. There were many who had not yet complied and it takes no unrealistic inference to recognize that future emissions estimates based on full compliance would mislead the public as to the effectiveness of the current regulations. Indeed, the natural unevenness in implementation and enforcement of regulations means regu-latory expectations based on full compliance are rarely likely to accurately identify the current environmental conditions relating to those regulations. Nor should such predictions be used. CEQA is not meant to stand as a barrier to appro-priate modifications to environmental regulations, whether they tighten or loosen existing regulations, provided the lead agency properly informs the public of the effects of those modifications and no significant environmental impact will arise. (See Neighbors, supra, 57 Cal.4th at p. 453 [noting the primary purpose an EIR is to provide “ ‘public agencies and the public in general with detailed information about the effect which a proposed project is likely to have on the en-vironment’ ”].) Respondents’ insistence that current existing conditions must account for those trucks that should comply with regulations in the future, but as of yet have not, suffers from the same flaw as the decision in Communities to rely on permitted standards that have not been utilized previously, differing only in whether the decision artificially inflates or deflates the appropriate baseline. Both metrics assume future potential conditions rather than evaluate the actual current environmental conditions.

Although respondents seek to distinguish Communities in the context of this argument, they do so by arguing the trial court “found that the ‘ “existing conditions” included the [Existing Regulations], and the emissions reductions that could be expected from enforcement of that regulation.’ ” This argument adds no weight to respondents’ positions. We do not review the trial court’s action, nor do we defer to the trial court’s findings in these matters. (Center for Biologi-cal Diversity, supra, 62 Cal.4th at p. 215 [“In determining whether there has been an abuse of discretion, we review

the agency’s action, not the trial court’s decision.”].) As our analysis of Communities shows, existing conditions do not properly include expected regulatory reductions. Including such predictions in the baseline adds a potential for games-manship and misdirection to the analysis and creates a sce-nario whereby the relevant conditions are no longer statically defined or tied to the existing circumstances at the beginning of the review.

Likewise, we find substantial evidence supports the Board’s decision to measure current existing conditions without reference to future expected reductions based on existing regulations. As a matter of logic, future expected reductions are not inherently relevant to a measurement of existing conditions in the same way that constantly fluctuat-ing conditions, such as existed in Communities, supra, 48 Cal.4th at pages 327-328, would be to ensuring decision makers are provided adequate information on the project’s impacts. Thus, the Board was within its discretion to deter-mine reliance on such factors when measuring the baseline was not proper. Moreover, the record before us demonstrates that these expected reductions were already in jeopardy due to financial costs associated with upgrading existing vehicles not in compliance and the continued issues with availability of capital for small fleets following the global recession. The Board was considering alternatives to the regulations based on this evidence and we conclude such information consti-tutes substantial evidence supporting the Board’s decision to measure based exclusively on current outputs.

Ultimately, we take no issue with respondents’ statement that “[p]lainly, the ‘existing environmental conditions’ in-clude applicable laws and regulations,” but such a recitation does not prove the error respondents pursue. By adopting as a baseline the current environmental conditions, the Board did take into account the applicable laws and regulations as they had affected the environment to that point in time. In-deed, the initial report noted in Appendix F the many ways the Board updated its analysis to determine the most current environmental conditions. That the Board properly exercised its discretion when not adjusting its baseline to include spec-ulative future reductions based on expected implementations under those laws and regulations does not mean those laws and regulations were retroactively excluded from the Board’s baseline analysis. We find no error in this methodology.

Possibility the Project Will Substantially Impact the Environment

Having determined the Board adopted a proper base-line, we next consider whether respondents produced any evidence supporting a fair argument that the project would have a substantial impact on the environment. In doing so, we take up respondents’ related argument concerning how CEQA Guidelines, section 15125, subdivision (e) impacts the Board’s decision not to consider a temporary increase in pollutants significant. Although we conclude the Board properly determined there would be no substantial impact


on the environment under the significance standards it chose to apply, we find a fair argument exists that the project will impact the environment in the short term. We further recog-nize the Board may not rotely apply standards of significance that do not address that potential effect once evidence of the risk has been identified. Accordingly, we conclude the Board abused its discretion in issuing the functional equivalent of a negative declaration.

The parties’ dispute with respect to this issue centers on the criteria relied upon by the Board to assess whether any alleged impacts on the environment from modifying the regu-lation are significant. According to the Board, the modifica-tions had no substantial impact under two different analyses. First, when measured against the current output of pollutants, the Board found that implementing the amendments would result in a continual decrease in pollutant output. Thus, at no point would the regulations result in an absolute increase in pollutants. Second, when compared to California’s long term air pollution reduction plans, the Board found imple-mentation of the amendments resulted in a slower projected decrease in pollutants but that this slower pace would have no impact on California’s ability to meet its 2023 emission goals. Respondents do not directly attack these findings. Rather, respondents contend a fair argument exists that three types of pollutants, oxides of nitrogen, particulate matter, and greenhouse gases, will increase in the short term over the measurements that would have existed had the original regu-lations remained in place. Respondents claim these increases are significant, both at a local and statewide level.

Standard of Review and Applicable Law“ ‘CEQA excuses the preparation of an EIR and allows the

use of a negative declaration when an initial study shows that there is no substantial evidence that the project may have a significant effect on the environment.’ ” (Rominger v. Coun-ty of Colusa (2014) 229 Cal.App.4th 690, 713 (Rominger).) Thus, one of the critical first steps in CEQA “is to determine whether the project may have a significant effect on the en-vironment.” (Amador Waterways v. Amador Water Agency (2004) 116 Cal.App.4th 1099, 1106 (Amador Waterways); see Pub. Resources Code, § 21082.2, subd. (d).)

As the CEQA Guidelines explain, if “there is substantial evidence, in light of the whole record before a lead agen-cy, that a project may have a significant effect on the en-vironment, the agency shall prepare a draft EIR.” (CEQA Guidelines, § 15064, subd. (a).) “An ironclad definition of significant effect is not always possible because the signifi-cance of an activity may vary with the setting.” (Id., subd. (b).) With respect to greenhouse gases, lead agencies “should consider the following factors, among others, when assessing the significance of impacts from greenhouse gas emissions on the environment: [¶] (1) The extent to which the project may increase or reduce greenhouse gas emissions as com-pared to the existing environmental setting; [¶] (2) Whether the project emissions exceed a threshold of significance that

the lead agency determines applies to the project[;] [¶] (3) The extent to which the project complies with regulations or requirements adopted to implement a statewide, regional, or local plan for the reduction or mitigation of greenhouse gas emissions. . . . If there is substantial evidence that the possible effects of a particular project are still cumulatively considerable notwithstanding compliance with the adopted regulations or requirements, an EIR must be prepared for the project.” (CEQA Guidelines, § 15064.4, subd. (b).) More generally, agencies are encouraged to develop thresholds of significance to use in determining whether a project has sig-nificant environmental effects. “A threshold of significance is an identifiable quantitative, qualitative or performance level of a particular environmental effect, non-compliance with which means the effect will normally be determined to be significant by the agency and compliance with which means the effect normally will be determined to be less than signifi-cant.” (CEQA Guidelines, § 15064.7, subd. (a).)

Despite the encouragement to develop thresholds of sig-nificance and to consider environmental impacts against cer-tain standards, such comparisons “cannot be used to deter-mine automatically whether a given effect will or will not be significant. . . . In each instance, notwithstanding compliance with a pertinent threshold of significance, the agency must still consider any fair argument that a certain environmen-tal effect may be significant.” (Amador Waterways, supra, 116 Cal.App.4th at pp. 1108-1109.) In other words, “[a] lead agency cannot avoid finding a potentially significant effect on the environment by rotely applying standards of significance that do not address that potential effect.” (Rominger, supra, 229 Cal.App.4th at p. 717.) Thus, if one can point to sub-stantial evidence in the record that a project might constitute a significant effect on the environment notwithstanding the agency’s applied standard of significance, then the agency cannot avoid its obligation to prepare an EIR by rotely rely-ing on its standard. (Ibid.)

In reviewing an agency’s decision to adopt a negative dec-laration, courts utilize the same fair argument test applied by the agency. (Rominger, supra, 229 Cal.App.4th at p. 713.) “The fair argument standard is met if the agency’s initial study of the project produces substantial evidence supporting a fair argument that the proposed project may have a signifi-cant adverse effect on the environment.” (Citizens for the Res-toration of L Street v. City of Fresno (2014) 229 Cal.App.4th 340, 364.) “The fair argument standard is a low threshold.” (Ibid.) We review this issue independently. (Rominger, supra, 229 Cal.App.4th at p. 713.)

The Board Ignored a Fair Argument in this Case

In challenging the Board’s decision in this case, respon-dents needed “to ‘ “demonstrate by citation to the record the existence of substantial evidence supporting a fair argument of significant environmental impact.” ’ ” (Rominger, supra, 229 Cal.App.4th at p. 727.) With respect to oxides of nitro-


gen, particulate matter, and greenhouse gases, respondents point to specific data in the initial statement showing that each would increase across California under the amended regulations when compared to the then-existing regulations. Respondents further point to evidence the increases identi-fied are significant on a statewide basis and with respect to specific geographical areas.4

The Board does not directly tackle these alleged increases in its briefing.5 Rather, in its opening brief, the Board rec-ognizes that it found emissions are projected to decline at a slower pace between 2015 and 2017, with the overall de-crease being nearly identical by 2018. It then concedes, “this comparison could show the potential for a lower rate of re-ductions, and thus, an unrealized emissions benefit,” before, without citation to the record, arguing “the emissions reduc-tions as projected in 2010 were no longer valid and reliable to use as a baseline in 2014.” In reply, it further attempts to tie its baseline determination to the significance issue by arguing that “in erroneously finding [the Board] used the incorrect baseline, the trial court improperly found a ‘fair argument.’ ” (Boldface & some capitalization omitted.) Ultimately, the Board’s argument is that the evidence supports the Board’s “finding of no significant impacts because the 2014 amend-ments result in the same emissions reductions in 2023 allow-ing California to meet its State Implementation Plan, which is the primary objective of the Truck and Bus Regulation.”

As noted above, the Board cannot simply rely on its set-tled baseline determination and factors of significance in the face of substantial evidence the project might have a signifi-cant impact on the environment. (Rominger, supra, 229 Cal.App.4th at p. 717.) While the Board could reasonably rely on either the direct reduction in emissions or the ultimate compliance with California’s air pollution reduction goals when conducting its initial study (see Center for Biological Diversity, supra, 62 Cal.4th at p. 223), its reliance on these significance standards did not alleviate it from its obligation to proceed further if respondents identified evidence in the

4. For oxides of nitrogen, respondents point to evidence the change will increase emissions by five tons per day in 2014 and 21 tons per day in 2017. Respondents compare these figures to the sig-nificance standard of 10 tons per year for projects in the San Joaquin Valley and claim they would constitute over 2 percent of statewide on-road mobile sources of emissions in 2017. For particulate matter, respondents compare a 1.1 ton per day increase in 2017 with the 15 ton per year significance standard in the San Joaquin Valley and claim the increase could account for 1.4 percent of statewide on-road motor vehicle emissions. For greenhouse gases, respondents focus on black carbon emissions and argue the short term increase identified is nearly 1 percent of the statewide daily greenhouse gas inventory.

5. The initial statement does seem to consider a five ton per day increase in oxides of nitrogen in 2017 within the San Joaquin Valley, concluding “emissions would remain at or below the level that would provide for attainment by 2017” resulting in “no expected impact on 1-hour ozone SIP [(State Implementation Plan)] for the San Joaquin Valley.” The statement seems to also consider black carbon impacts. However, the Board makes no argument these analyses correspond to respondents’ positions or otherwise supports the Board’s conduct.

record suggesting the project may significantly impact the environment under different standards.

Here, we find respondents did just that. Although respon-dents raise the issue in the context of determining a proper baseline, they correctly note that under the CEQA Guidelines the Board is obligated to discuss “inconsistencies between the proposed project and applicable general plans, specific plans and regional plans,” including the State Implementation Plan (reflecting the state’s long-term air pollution reduction goals) and plans for the reduction of greenhouse gas emissions in any EIR’s generated. (CEQA Guidelines, § 15125, subd. (d).) In its initial statement, the Board provides information regarding such a comparison, although it finds no inconsis-tency in the long term. It is this same evidence that respon-dents cite to for their “fair argument.” While the Board may disagree with the conclusions drawn by respondents regard-ing the short- to medium-term impacts, the evidence is suf-ficient to require the Board to make that disagreement public through the equivalent of an EIR, where such a comparison is generally required. (See Neighbors, supra, 57 Cal.4th at p. 455 [“Though we might rationally choose to endure short- or medium-term hardship for a long-term, permanent ben-efit, deciding to make that tradeoff requires some knowledge about the severity and duration of the near-term hardship.”].) The Board’s failure to acknowledge and act upon this fair argument violated CEQA.

Contentions Under the APAAlthough we find the modified regulations cannot stand

under CEQA, the parties also dispute whether the Board prop-erly complied with the APA’s provisions regarding the need to assess certain potential adverse economic impacts arising from the modifications. The trial court found the Board did not proceed according to the APA’s requirements in conduct-ing its analysis and responding to community comments. We reach this issue because proper compliance with the APA will be required should the Board further pursue regulatory modifications. On this point, we received amicus briefing from a coalition of 10 business and industry organizations interested in the proper application of the APA’s economic impact analysis requirements.6

Relevant APA PrinciplesBorn from a perception that “ ‘there existed too many reg-

ulations imposing greater than necessary burdens on the state and particularly upon small businesses,’ ” the APA provides a procedural vehicle to review proposed regulations or modi-fications thereto in order to “ ‘advance “meaningful public participation in the adoption of administrative regulations by state agencies” and create “an administrative record assuring

6. Amici have requested we take judicial notice of certain legisla-tive documents reflecting the intent and purpose behind enacting the APA. The Board opposed taking notice of these documents and we deferred ruling on the request. Because we do not ultimately rely on the contested documents, we deny the motion as moot.


effective judicial review.” ’ ” (Western States Petroleum Assn. v. Board of Equalization (2013) 57 Cal.4th 401, 424-425 (Western States).) In other words, the APA establishes basic minimal procedural requirements for rulemaking in Califor-nia. (POET I, supra, 218 Cal.App.4th at p. 743.) “Pursuant to those procedural requirements, agencies must, among other things, (1) give the public notice of the proposed regulatory action; (2) issue a complete text of the proposed regulation with a statement of reasons for it; (3) give interested parties an opportunity to comment on the proposed regulation; (4) respond in writing to public comments; and (5) maintain a file as the record for the rulemaking proceeding.” (Id. at pp. 743-744.)

As part of the initial disclosures required under step two, a rulemaking agency “must include ‘[f]acts, evidence, docu-ments, testimony, or other evidence on which the agency re-lies to support an initial determination that the action will not have a significant adverse economic impact on business.’ ” (Western States, supra, 57 Cal.4th at p. 425.) The agency’s initial statement is followed by a public comment period, after which, “if the agency decides to enact the regulation, it must prepare a ‘final statement of reasons’ for adopting the proposed rule, which must include ‘[a]n update of the infor-mation contained in the initial statement of reasons.’ ” (Id. at p. 426.) This final statement “must also include ‘[a] summary of each objection or recommendation made regarding the specific adoption, amendment, or repeal proposed, together with an explanation of how the proposed action has been changed to accommodate each objection or recommendation, or the reasons for making no change.’ ” (Ibid.) This aspect of the procedures is referred to as the economic impact assess-ment requirement. (Id. at p. 425.)

Looking at this requirement more granularly, under Gov-ernment Code section 11346.5, subdivision (a)(8), “If a state agency, in adopting, amending, or repealing any administra-tive regulation, makes an initial determination that the ac-tion will not have a significant, statewide adverse economic impact directly affecting business, including the ability of California businesses to compete with businesses in other states, it shall make a declaration to that effect in the notice of proposed action.” Similarly, under Government Code sec-tion 11346.3, subdivision (a), “A state agency proposing to adopt, amend, or repeal any administrative regulation shall assess the potential for adverse economic impact on Califor-nia business enterprises and individuals, avoiding the imposi-tion of unnecessary or unreasonable regulations or reporting, recordkeeping, or compliance requirements.” This section requires the agency to “prepare a standardized regulatory im-pact analysis,” that “shall address” several factors including the “creation or elimination of jobs within the state,” the “cre-ation of new businesses or the elimination of existing busi-nesses within the state,” and the “competitive advantages or disadvantages for businesses currently doing business within the state.” (Id., subd. (c)(1).)

An agency’s initial determination “ ‘need not be conclu-sive, and the qualifying adjective “significant” indicates that the agency need not assess or declare all adverse economic impact[s] anticipated.’ ” (Western States, supra, 57 Cal.4th at p. 428.) Similarly, “an agency’s initial determination of economic impact need not exhaustively examine the subject or involve extensive data collection. The agency is required only to ‘make an initial showing that there was some factual basis for [its] decision.’ ” (Id. at p. 429.) Indeed, “a regula-tion will not be invalidated simply because of disagreement over the strict accuracy of cost estimates on which the agency relied to support its initial determination.” (Ibid.) Once the initial assessment is complete, “affected parties may com-ment on the agency’s initial determination and supply addi-tional information relevant to the issue.” (Ibid.) The agency “must respond to the public comments and either change its proposal in response to the comments or explain why it has not.” (Ibid.)

Standard of ReviewWe review the Board’s “initial determination to determine

that the [Board] has substantially complied with its obliga-tions, and whether it is supported by some substantial evi-dence.” (California Assn. of Medical Products Suppliers v. Maxwell-Jolly (2011) 199 Cal.App.4th 286, 307.) Interpret-ing the relevant statutes to determine whether the Board has substantially complied with its obligations is a question of law to which we apply an independent standard of review. (POET I, supra, 218 Cal.App.4th at p. 748.)

In its briefing, the Board argues “[t]he standard of review for a purely procedural APA claim is not precisely clear” and, relying primarily on Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1 (Yamaha), argues its con-duct fell within its regulatory and rulemaking authority and thus is subject to a deferential review where we accord the Board’s decisions great weight and respect. Although there are circumstances where such a standard of review is appli-cable to the Board’s conduct, it is not in review of APA pro-cedural compliance issues. Indeed, we held so definitively in POET I, supra, 218 Cal.App.4th at pages 747-748, where we rejected this same argument and reliance on Yamaha. Con-trary to the Board’s arguments in response to amici, POET I is not distinguishable simply because it dealt specifically with rules relating to maintaining the record file during rule-making. As we noted in POET I, the procedures set forth in chapter 3.5, article 5 of the APA, which include not only the rulemaking file requirements but all the contested provisions in this case, govern “the adoption and amendment of regu-lations by state agencies” and “establish[] ‘basic minimum procedural requirements’ for rulemaking,” the violation of which may result in the regulation being declared invalid. (POET I, supra, 218 Cal.App.4th at pp. 743-744.) Our con-clusion in POET I, that we independently review and inter-pret the procedural requirements of the APA, controls.


We further note this conclusion comports with our Su-preme Court’s precedent in Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 576-577, and Armistead v. State Personnel Board (1978) 22 Cal.3d 198, 204-205. Both of those cases explained that an agency’s decision to include non-APA compliant interpretations of legal princi-ples in its regulations will not result in additional deference to the agency. Here, the Board claims its economic analysis resulted from its interpretation of how the APA’s analytical process should be conducted—i.e. that the Board need only consider whether California companies will be harmed vis-à-vis competition with out-of-state companies. Although the Board attempts to rely on an approval of its economic analy-sis from the Department of Finance to claim its interpreta-tion of the APA was proper, it points to no formal regulation supporting its interpretation and, as respondents point out, the record itself provides no indication the Board’s inter-pretation was even conveyed to the Department of Finance when it reviewed the Board’s work. Even if within the realm of the Board’s authority, which our conclusion in POET I demonstrates is not the case, such unstated and undeveloped interpretations do not comply with the APA and are entitled to no deference. (Tidewater Marine Western, Inc. v. Brad-shaw, supra, 14 Cal.4th at p. 576 [“ ‘[T]o give weight to [an improperly adopted regulation] in a controversy that pits [the agency] against an individual member of exactly that class the APA sought to protect . . . would permit an agency to flout the APA by penalizing those who were entitled to notice and opportunity to be heard but received neither.’ ”].) Ultimately, review here is not fundamentally different from any other set of laws under which the Board must operate when engaged in its rulemaking activities, including CEQA.

The Board’s Conduct Violated the APAAs detailed above, under the APA’s economic analysis re-

quirements, the relevant agency must consider whether the regulation will have a significant statewide adverse economic impact directly affecting business. The Board’s argument in support of its economic analysis under this standard centers on accepting the premise that the Board “interpreted this pro-vision as requiring an analysis of the competitiveness of the whole California trucking industry relative to the industry outside the state.” The Board contends it had no obligation under the APA to extend its analysis further, in part because the evidence offered of harm to certain trucking fleets was “speculative, and expressed the general sentiment that the truck fleets that had already complied would be at a financial disadvantage as compared to the truck fleets that had not yet complied.”

We do not agree with the Board that the economic im-pact analysis requirements are so narrowly drawn. Nothing in the language of the relevant statutes suggests the economic interests relevant to the APA analysis are solely inter-state interests. Government Code section 11346.5 broadly re-quires consideration of “significant, statewide adverse eco-

nomic impact[s] directly affecting business.” (Id., subd. (a)(8).) While it then references inter-state impacts, it does so by adding them to the required analysis rather than limiting the analytical scope. (Ibid. [“including the ability of Califor-nia businesses to compete with businesses in other states”].) Likewise, Government Code section 11346.3 requires an analysis of several factors that are broadly drafted in a man-ner which does not suggest solely inter-state impacts, such as the “creation of new businesses or the elimination of exist-ing businesses within the state,” and the “competitive advan-tages or disadvantages for businesses currently doing busi-ness within the state.” (Id., subd. (c)(1).) This later provision strongly suggests the Board must look at each type of busi-ness subject to the relevant proposals and consider whether those proposals will advantage or disadvantage that particu-lar type, despite the source of those impacts being advantages the regulations bring to other in-state businesses. Finally, the APA’s general purpose of relieving stress on small businesses subject to unnecessary regulation further supports a broad reading of the required analysis. The desire to relieve burdens on small businesses necessarily entails a consideration of how those small businesses are impacted by regulations rela-tive to larger in-state businesses that will not feel the impact of such regulations at the same scale. We therefore conclude the Board was not permitted under the statutory scheme to ignore evidence of impacts to specific segments of businesses already doing business in California from benefits to other in-state businesses when proceeding under the APA. If the Board’s proposed regulatory amendments placed the state’s thumb on the scale for one group of in-state businesses over another, it needed to consider that impact.

Notably, the Board’s discussions in the relevant docu-ments appear to recognize this requirement, despite its cur-rent arguments on appeal. When discussing expected chang-es in costs for particulate matter filter upgrades for heavier trucks, the initial statement explained “[l]ong-haul trucking fleets that are based in California or outside California do not compete in the same markets as vocational trucks and are af-fected differently because of their business model and type of truck used.” Likewise, the initial statement, when discussing changes in costs for long-haul fleets, explained there may be potential differences in impact between large and small fleets, “fleet owners that have acted early or have downsized, and owners that cannot afford to comply.” The initial state-ment also included a separate discussion of impacts on small businesses and took the time to recognize, although not ana-lyze, the fact that there needed to be a balancing between the needs of compliant and non-compliant fleets.

We further recognize that evidence of in-state effects be-tween compliant and non-compliant fleets was presented to the Board in the form of testimonials provided by impacted businesses. These testimonials informed the Board that sig-nificant expenditures had been required to comply with the previous compliance deadlines, that non-compliant fleets without those additional expenses were therefore able to


undercut compliant fleets on pricing, and that providing ad-ditional time for those non-compliant fleets to meet the rel-evant standards under the modified regulations could result in substantial harm to some of those businesses, including bankruptcy. Such evidence is not mere speculation and in similar contexts, specific testimonial evidence from the pub-lic has been readily identified as substantial evidence sup-porting the need for a response. (See Architectural Heritage Assn. v. County of Monterey (2004) 122 Cal.App.4th 1095, 1117-1118 [discussing relevant evidence in CEQA fair ar-gument context to include public testimony].) Accordingly, regardless of whether the Board was aware of such impacts at the time it made its initial report, it was made aware of them through the proper procedural mechanism of public comment and, as such, had an obligation to respond under the APA. (See Western States, supra, 57 Cal.4th at p. 429 [explaining that, upon provision of proper comments from public, agency “must respond to the public comments and either change its proposal in response to the comments or explain why it has not”].)

The Board’s responses to this evidence were insufficient under the APA. Although the Board appeared to respond to the comments received, its responses were not supported by any record evidence. For example, the Board alleged that it had considered issues of fairness and structured provisions in the modifications accordingly. Yet it argues the exact opposite on appeal—that it did not consider intra-state competition—and we have been pointed to no analysis in the administrative record showing the Board actually analyzed such impacts and acted in light of these concerns. As the APA requires the Board to explain why it chose not to make changes in the face of substantial evidence of impacts, unsupported asser-tions the evidence—neither actually collected nor reviewed by staff—was considered in drafting the regulations simply cannot satisfy the APA. In failing to properly respond to the comments regarding intra-state competition issues, the Board failed to abide by its obligations under the APA in either form or substance.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to respondents.

DETJEN, J.WE CONCUR: LEVY, Acting P.J., POOCHIGIAN, J.


VISALIA RETAIL, LP, Plaintiff and Appellant,

v.CITY OF VISALIA, Defendant and

Respondent.

No. F074118In The Court of Appeal of the State of CaliforniaFifth Appellate District(Tulare Super. Ct. No. VCU258614)APPEAL from a judgment of the Superior Court of Tulare County. Bret D. Hillman, Judge.Filed January 4, 2018Certified for Publication January 30, 2018

COUNSEL

Shore McKinley & Conger, Brett S. Jolley and Aaron S. McKinney for Plaintiff and Appellant.

Herr Pedersen & Berglund, Leonard C. Herr and Ron Statler for Defendant and Respondent.

ORDER

It appearing that part of the nonpublished opinion filed in the above entitled matter on January 4, 2018, meets the stan-dards for publication specified in California Rules of Court, rule 8.1105(c), IT IS ORDERED that the opinion be certified for publication in the Official Reports with the exception of part III of the Discussion.

POOCHIGIAN, Acting P.J.WE CONCUR: DETJEN, J., BLACK,† J.

† Judge of the Fresno Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the Cali-fornia Constitution.

OPINIONThis appeal involves a challenge to an update of the City

of Visalia’s (Visalia) general plan. Included in the update is a land use policy affecting areas designated “Neighborhood Commercial.” Under the policy, no tenant in a Neighborhood Commercial area may be larger than 40,000 square feet in size.

Appellant claims Visalia violated the California Environ-mental Quality Act (Pub. Resources Code, § 21000 et seq.; “CEQA”) by failing to analyze the potential for the land use policy to cause a phenomenon called urban decay. “CEQA does not define urban decay” but some have defined it as “visible symptoms of physical deterioration that invite van-


dalism, loitering, and graffiti that is caused by a downward spiral of business closures and multiple long term vacancies.” (Joshua Tree Downtown Business Alliance v. County of San Bernardino (2016) 1 Cal.App.5th 677, 685 (Joshua Tree).)

Appellant, likely prompted by concerns as to how the gen-eral plan update would adversely impact property it owns, challenged the proposed land use policy. Appellant submitted to Visalia the opinion of an experienced local commercial real estate agent that the land use policy would cause anchor vacancies and/or lower-traffic anchors, which would reduce rental income landlords use for maintenance and improve-ments, which would “creat[e] a downward spiral of physical deterioration.”

The propriety of the tenant size cap was discussed by city staff and councilmembers at various points in the process of drafting and approving the general plan update. However, the environmental impact report (EIR) itself did not analyze the potential for urban decay. Appellant contends this rendered the EIR fatally flawed. We disagree.

CEQA is concerned with significant effects on the envi-ronment (§ 21100, subd. (b)), not with purely economic im-pacts. (see Cal. Code Regs., tit. 14, § 15382)1 The fact that a policy may hurt certain businesses is not an effect covered by CEQA, unless that impact on business causes a significant effect on the environment. (See Joshua Tree, supra, 1 Cal.App.5th at p. 685, quoting South Orange County Wastewa-ter Authority v. City of Dana Point (2011) 196 Cal.App.4th 1604, 1614 (Dana Point).) Here, appellant failed to produce sufficient evidence from which a fair argument can be made that the land use policy at issue may cause a significant ef-fect on the environment, rather than purely economic effects.

As explained below, appellant’s expert supported his opin-ion largely with conjecture as to whether the land use policy would cause urban decay. Moreover, even if the land use pol-icy would undoubtedly cause some adverse economic con-sequences, appellant’s expert offered little to show that “the magnitude of this effect” (Joshua Tree, supra, 1 Cal.App.5th at p. 691, original italics) may lead to a substantial impact on the environment. That is, “even if a handful of proper-ties were to remain permanently vacant, the result would not necessarily be the kind of change the physical environment that implicates CEQA.” (Ibid.)

We also reject appellant’s claims that the amended gen-eral plan is internally inconsistent and that Visalia violated a notice requirement of the Planning and Zoning Law (Gov. Code, § 65000 et seq.) We affirm the judgment.

FACTS

Every city in California must adopt “a comprehensive, long-term general plan for the physical development of the … city ….” (Gov. Code, § 65300.) “A general plan provides a “ ‘charter for future development’ ” and sets forth a city

1. The Guidelines for the Implementation of the California Envi-ronmental Quality Act (Cal. Code Regs., tit. 14, § 15000 et seq.) will hereinafter be referred to as the “Guidelines.”

or county’s fundamental policy decisions about such devel-opment. [Citation.]” (San Francisco Tomorrow v. City and County of San Francisco (2014) 228 Cal.App.4th 1239, 1247.) The general plan may be amended in the public inter-est. (Gov. Code, § 65358.)

In April 2010, Visalia filed a “Notice of Preparation” (see Guidelines, § 15082) indicating it was preparing to update its general plan, and that an EIR was required. Though spe-cific proposals on how to update the general plan had “not yet been determined,” the general plan update would “likely address” various topics including land use and city design.

The notice identified a “next step” in the process, which would involve a group called the General Plan Update Re-view Committee (GPURC). The GPURC would participate in the development of potential “land use and transportation alternatives” and prepare a “Preferred Plan.” The Preferred Plan would be presented to Visalia’s “decision-makers,” and the general plan update would be drafted based on the Pre-ferred Plan.

On January 22, 2013, the Visalia City Council met with the planning commission to review the progress made by the GPURC. City council members and planning commission-ers “provided preliminary feedback to staff for additional analysis.” Staff prepared “white papers” addressing various decision points raised by the councilmembers’ feedback.

One of the white papers concerned the land use policy applicable to properties classified as “Neighborhood Com-mercial.” The white paper referenced a draft land use policy called LU-P-66,2 which read in pertinent part:

“Shopping centers in Neighborhood Commercial areas should have the following:

• Anchoredbyagrocerystoreorsimilarbusinessof-fering fresh produce, poultry, fish and meat;

• Includesmallerin-linestoresoflessthan10,000square feet;

• Totalsizeof5to12acresasshownontheLandUseDiagram; and

• Integratedwithsurroundingneighborhoodusesinterms of design, with negative impacts minimized.

“Standards for Neighborhood Commercial develop-ment also should require design measures that create a walkable environment and require local street and pe-destrian connections. Alterations and additions in exist-ing nonconforming centers may be permitted, subject to design review and conditions of approval to minimize neighborhood impacts.” (Italics omitted.)”

2. The policy was later renumbered to LU-P-67.


The staff white paper identified concerns raised with re-spect to the draft of LU-P-66. Residents of the Stonebridge neighborhood had expressed that there should be “a size limit for anchor stores (i.e., maximum of 35,000 SF).” The resi-dents argued that “grocery stores over 50,000 SF are not truly serving just the surrounding neighborhood, but will target shoppers from outlying areas, thereby creating additional traffic, noise, and other impacts and inviting persons from outside the immediate neighborhood.”3

The white paper indicates the GPURC “considered” a size limit on grocery stores, but rejected the idea, concluding “the free market will dictate the size of grocery store that will work for a given site and neighborhood. Further, placing a limit on building size could work against continually evolv-ing changes in industry trends and store prototypes.”

Visalia staff also provided their own commentary on the size cap issue. They observed that maximum size lim-its for anchor stores “are somewhat arbitrary.” “A typical Savemart grocery store is about 55,000 square feet,” but a “new Walmart neighborhood grocery store being constructed at Houston and Demaree is about 38,000 square feet.” Visa-lia staff further observed that store sizes “are dependent on market dynamics” and setting a limit “may create difficulties for grocery stores to locate in Visalia or for [Neighborhood Commercial] sites to attract an anchor tenant.”

The white paper recommended that the city council adopt LU-P-66 in its current form. The white paper offered two al-ternatives to the current draft, one of which was to “establish a maximum (and/or minimum) square footage size require-ment for anchor tenants….”

City Council Work Session on February 25, 2013

The City Council held a work session on February 25, 2013. Councilmembers discussed various issues. It was Visalia’s staff’s “understanding from the discussion among

3. Another concern identified in the white paper was raised by Thomason Development Company (Thomason). Thomason owned a 15.5-acre property located at Lovers Lane and Walnut. At the time, the property was designated Neighborhood Commercial, but the proposed general plan update would have redesignated the north 6.2 acres of the property as Medium Density Residential. Thomason testified that a development project on the site was “still active” and that the entire site should remain designated as Neighborhood Commercial. But if the north portion of the site was going to be redesignated, Thomason preferred a Commercial Mixed Use designation over a Medium Den-sity Residential designation.

The white paper indicated that the GPURC “carefully considered land use designation options for the 15.5-acre property and ultimate-ly chose to recommend a mix of Neighborhood Commercial (south 9.3 acres) and Medium Density Residential (north 6.2 acres).” The GPURC reaffirmed its decision at an August 30, 2012, meeting and the planning commission concurred at a September 24, 2012, work session. The planning commission “also suggested possibly consider-ing a Neighborhood Commercial/Mixed Use Commercial split, which some Stonebridge residents expressed opposition to.”

The appellate briefs indicate that appellant Visalia Retail, LP also owns the property. The precise relationship between Visalia Retail, LP and Thomason is unclear.

the Councilmembers” that they wanted to “set a maximum anchor tenant size of 40,000 sq. ft….” Consequently, staff recommended the following pertinent changes to LU-P-66:

“Shopping centers in Neighborhood Commercial areas should shall have the following:

• Anchoredbyagrocerystoreorsimilarbusinessof-fering fresh produce, poultry, fish and meat;

• Includesmallerin-linestoresoflessthan10,000square feet;

• Totalsizeof5to12acresasshownontheLandUseDiagram; and

• Integratedwithsurroundingneighborhoodusesinterms of design, with negative impacts minimized.

• Located no closer than one mile from other General Plan-designated Neighborhood Commercial or Com-munity Commercial locations, or from existing gro-cery stores.

• No individual tenant shall be larger than 40,000 square feet in size.

“Standards for Neighborhood Commercial develop-ment also should shall require design measures that cre-ate a walkable environment and require local street and pedestrian connections. Alterations and additions in ex-isting nonconforming centers may be permitted, subject to design review and conditions of approval to minimize neighborhood impacts.”4

The city council adopted the recommended language on April 1, 2013.

Draft General Plan Update and Draft EIRVisalia had urban and regional planning consultants pre-

pare a “public review draft” of the general plan update, and a draft EIR, both dated March 2014. The draft general plan update referred to the land use policy at issue in this case as “LU-P-67” rather than LU-P-66. The policy included the 40,000 square-foot cap on tenants.

The draft EIR was circulated for review and comment from March 31 through May 14, 2014. A “final” EIR was prepared on June 26, 2014.

4. This is how LU-P-67 reads in the final, adopted general plan update, except that the word “characteristics” was added after “follow-ing” in the first sentence.


Appellant’s Written Objection Letter Dated October 6, 2014

Appellant’s counsel sent a letter dated October 6, 2014,5 to the mayor and city council. The letter was sent on behalf of his clients, “Thomason Development Company/Visalia Re-tail, LP.” The letter expressed objection “to the proposed cer-tification of the Final Environmental Impact Report (‘FEIR’), the proposed re-designation of nearly seven acres of Thoma-son’s property as Medium Density Residential along with the proposed overly-restrictive Land Use Policy, LU-P-67, found in the 2030 General Plan Update that will not only limit eco-nomic activity in the City of Visalia, but will lead to the urban decay and other physical effects in Visalia.”

Anderson ReportEnclosed with appellant’s counsel’s October 6, 2014, letter

was a report written by Thomas Anderson, a real estate bro-ker (“the report”). The report first described Anderson’s ex-perience and qualifications, which included: (1) cofounding a real estate brokerage firm in 1981; (2) having been “involved in retail shopping center leasing and development since 1978”; (3) having “been instrumental in the construction of over 65 shopping centers … comprising over 6,000,000 square feet”; (4) having been “involved in 45 grocery store transactions”; (5) having “completed 25 drug store deals with Payless Drug, CVS Pharmacy, Thrifty and Save On.”

The report opined that the 40,000 square-foot cap “cre-ates the strong likelihood that [neighborhood commercial] centers will never develop in Visalia.” It also noted that even with his extensive experience with grocery store anchors, he is “unaware of any grocers willing to build new stores under 40,000 sq. ft. in size.” The report asserted that a “typical Save Mart, Safeway/Vons, Albertsons, or Lucky supermarket de-mands at least 50,000 square feet for a new store to ‘pencil out’ financially.” (Fn. omitted.)

The report also cited news articles indicating that the 2009 launch of 10,000 to 20,000 square-foot “Fresh & Easy” stores by “UK mega-grocer Tesco[]” failed and left some landlords “high and dry.”

The report indicated that neighborhood supermarket an-chors smaller than 40,000 square feet have been unable to maintain long-term, successful operations in Visalia. It cited three examples of stores in the area that were no longer in operation. In contrast, the report identified two Save Marts exceeding 50,000 square feet that “are serving the neighbor-hoods with close and convenient shopping as planned.”

The report also cited the Urban Land Institute as saying, “The neighborhood shopping center provides merchandise for daily living needs – convenience goods like food, drugs, hardware, and personal services. A supermarket is the prin-cipal tenant in this type of shopping center.” (Emphasis omit-ted.) The report then opined:

5. The letter indicated that it would be hand delivered.

“The reason for the inclusion of supermarkets in these centers is not difficult to fathom: Supermarkets are the primary draw for the center, and the visitation that they generate is essential for the success of all the tenants. If supermarkets are replaced by low volume tenants such as discount furniture operations that draw few patrons to the center, great harm may accrue to the other tenants, with downward pressure on sales volumes, occupancy and tenant quality.”

The report said that the size cap would not encourage gro-cers to build small stores but would instead cause them to decline to enter the Visalia market entirely. The report ac-knowledged that it was possible to attract one of a limited number of 40,000 square-foot Walmart neighborhood market anchors, but said that Walmart was unique, and “the more likely scenario will be the absence of any development of new neighborhood retail.”

The report said physical effects could result from urban decay.

“In the context of a neighborhood center, there are few acceptable alternatives to [the] presence of the super-market anchor. Therefore, even if some space can be re-tenanted by other (weaker) tenants, the center may be subject to physical deterioration, urban decay, and blight.

“In addition to physical impacts resulting from failing to provide neighborhood retail needs, these vacancies also, in several situations, would lead to or exacerbate physi-cal blight and ‘urban decay’ deterioration of the centers resulting from anchor vacancies or by backfilling vacant anchor space with less-utilized commercial uses such as gyms, furniture stores, or ‘99 cent’ stores. Sometimes anchor grocery stores would continue to operate but would seek rent reductions from their landlords. Such reduced revenue stream, in turn, reduced the landlords’ available capital [to] maintain and improve these prop-erties, creating a downward spiral of physical deterioration.”

The report also briefly opined on the “downzoning” of 6.2 acres of the Thomason property, leaving only 9.3 acres zoned as Neighborhood Commercial. It said that even without the tenant size cap, 9.3 acres is too “compact” of a site to attract anchor tenants.

Finally, the report said the tenant type and size require-ments were inconsistent with another part of the proposed general plan update called LU-P-45, which provided:

“Promote development of vacant, underdeveloped, and/or redevelopable land within the City limits where urban services are available and adopt a bonus/incentive pro-gram to promote and facilitate infill development in or-


der to reduce the need for annexation and conversion of primary agricultural land and achieve the objectives of compact development established in this General Plan.

“Techniques to be used include designation of infill op-portunity zones as part of the implementation process and provision of incentives, such as reduced parking and streamlined review, and residential density bonuses, and floor area bonuses for mixed use and/or higher-density development, subject to design criteria and findings of community benefit. (italics removed).”

The report asserted the tenant type and size requirements would discourage infill and were therefore inconsistent with LU-P-45.

Adopted General Plan UpdateOn October 14, 2014, the city council certified a final

EIR for the general plan update. At the same meeting, the city council adopted the general plan update subject to a few amendments passed at the meeting. The final, adopted gener-al plan update retained the 40,000 square-foot cap on tenants.

LitigationOn November 14, 2014, appellant filed a petition for writ

of mandate in superior court seeking to invalidate Visalia’s certification of the final EIR and adoption of the general plan update. The petition asserted that Visalia had failed to comply with CEQA, that the general plan update was inconsistent, and that Visalia failed to properly notice its October 14, 2014, meeting. The superior court rejected each claim, and entered judgment denying appellant’s petition on May 9, 2016.

DISCUSSION

I. APPELLANT FAILED TO PRESENT SUBSTANTIAL EVIDENCE FROM

WHICH A FAIR ARGUMENT COULD BE MADE THAT THERE IS A REASONABLE POSSIBILITY PHYSICAL URBAN DECAY WILL

RESULT FROM LU-P-67

A. Law

“With certain limited exceptions, a public agency must prepare an EIR whenever substantial evidence supports a fair argument that a proposed project ‘may have a significant ef-fect on the environment.’ [Citations.]” (Laurel Heights Im-provement Assn. v. Regents of University of California (1993) 6 Cal.4th 1112, 1123.)

“An [EIR] is an informational document which … shall be considered by every public agency prior to its approval or disapproval of a project. The purpose of an environmental impact report is to provide public agencies and the public in general with detailed information about the effect which a proposed project is likely to have on the environment; to list

ways in which the significant effects of such a project might be minimized; and to indicate alternatives to such a project.” (Pub. Resources Code, § 21061.)

“The function CEQA assigns to an EIR, in fact, epitomizes the statute’s focus on informed decisionmaking and self-gov-ernment. The statute does not necessarily call for disapproval of a project having a significant environmental impact, nor does it require selection of the alternative ‘most protective of the environmental status quo.’ [Citation.] Instead, when ‘economic, social, or other conditions’ make alternatives and mitigation measures ‘infeasible,’ a project may be approved despite its significant environmental effects if the lead agency adopts a statement of overriding considerations and finds the benefits of the project outweigh the potential environmental damage. [Citations.]” (California Building Industry Assn. v. Bay Area Air Quality Management Dist. (2015) 62 Cal.4th 369, 383.)

An EIR must set forth in detail “[a]ll significant effects on the environment of the proposed project.” (Pub. Resources Code, § 21100, subd. (b).) “ ‘Significant effect on the en-vironment’ means a substantial, or potentially substantial, adverse change in any of the physical conditions within the area affected by the project ….” (Guidelines, § 15382, italics added.) Because of the physicality requirement, “[a]n eco-nomic or social change by itself shall not be considered a significant effect on the environment.” (Ibid., italics added.) As a result, “[e]vidence of economic and social impacts that do not contribute to … physical changes in the environment is not substantial evidence that the project may have a sig-nificant effect on the environment.” (Guidelines, § 15064, subd. (f)(6).) But “[w]here a physical change is caused by economic or social effects of a project, the physical change may be regarded as a significant effect in the same manner as any other physical change resulting from the project.” (Guidelines, § 15064, subd. (e), italics added.)

As these aspects of the law demonstrate, “CEQA is not a weapon to be deployed against all possible development ills.” (Joshua Tree, supra, 1 Cal.App.5th at p. 685.) The fact that a project “may drive smaller retailers out of business is not an effect covered by CEQA. [Citation.] Only if the loss of business affects the physical environment – for example, by causing or increasing urban decay – will CEQA be engaged. [Citations.]” [Citation.]” (Ibid.)

“[I]n preparing an EIR, the agency must consider and re-solve every fair argument that can be made about the possible significant environmental effects of a project ….” (Protect the Historic Amador Waterways v. Amador Water Agency (2004) 116 Cal.App.4th 1099, 1109, italics added (Protect the Historic Amador Waterways).) An EIR is required “ ‘not only when a proposed project will have a significant environ-mental effect, but also when it “may”….’ [Citation.]” (Perley v. Board of Supervisors (1982) 137 Cal.App.3d 424, 432.) “The word “may” in this context connotes a reasonable pos-sibility. [Citations.]” (Citizen Action to Serve All Students v. Thornley (1990) 222 Cal.App.3d 748, 753.)


While appellant need only present a “fair” argument, the argument must nonetheless be based on substantial evidence. “[S]ubstantial evidence includes fact, a reasonable assump-tion predicated upon fact, or expert opinion supported by fact.” (Pub. Resources Code, § 21080, subd. (e)(1).) Specu-lation, argument, unsubstantiated opinion or narrative and evidence of economic impacts are not substantial evidence. (Pub. Resources Code, § 21080, subd. (e)(2).) “Complaints, fears, and suspicions about a project’s potential environmen-tal impact likewise do not constitute substantial evidence. [Citations.]” [Citation.]” (Joshua Tree, supra, 1 Cal.App.5th at p. 690.)

B. Issue on Appeal

Appellant argues that evidence in the administrative re-cord establishes that the tenant type restriction and size cap will cause significant physical impacts and, therefore, the EIR was inadequate for failing to address those impacts. Visalia responds that the Anderson report “fails to show how LU-P-67” will cause urban decay.6

Synthesizing the parties’ contentions and the applica-ble law summarized above, we can distill the issue before us to the following: can it be fairly argued from substan-tial evidence that there is a reasonable possibility LU-P-67 will cause urban decay in the form of significant, physical effect(s) on the environment?

Anderson’s urban decay argument can be roughly summa-rized as follows: the 40,000 square-foot cap will cause gro-cers to refuse to locate in neighborhood commercial centers, which will cause vacancies, which in turn will result in urban decay. Visalia counters that Anderson did not offer legally sufficient evidence that LU-P-67 will cause anchor tenants to refuse to locate in neighborhood commercial centers.

As explained below, we conclude that while the Anderson report presents an earnest policy case against LU-P-677, it fails to provide substantial evidence from which a fair argu-ment can be made that LU-P-67 may cause significant effects on the environment.

6. Visalia also argues that “even if” appellant had successfully raised a fair argument LU-P-67 would cause urban decay, the city “had substantial evidence upon which to base its decision.” But that is not the applicable standard. If appellant had raised a fair argument of urban decay based on substantial evidence, the EIR would have been required to analyze it. (See Protect the Historic Amador Waterways, supra, 116 Cal.App.4th at p. 1109 [“in preparing an EIR, the agency must consider and resolve every fair argument that can be made about the possible significant environmental effects of a project …”].)

7. We note that the report was offered not only to identify pur-ported CEQA issues, but also to present a broader policy case against the tenant size cap. While we conclude the report was not sufficient to require CEQA review of urban decay, we express no opinion on the merits of its policy case against LU-P-67. The issue before us “is not the wisdom of the policies adopted by the public agencies, but whether they complied with CEQA ….” (Environmental Council of Sacramen-to v. City of Sacramento (2006) 142 Cal.App.4th 1018, 1030.)

C. Analysis

The Anderson report offers four bases for the argument that grocers will indeed refuse to locate in neighborhood commercial centers as a result of LU-P-67: (1) Anderson is personally unaware of any grocers willing to build new stores under 40,000 square feet; (2) a “typical” SaveMart, Safe-way/Vons, Albertsons or Lucky store requires at least 50,000 square feet to be profitable; (3) Tesco launched multiple 10,000-20,000 square foot grocery stores and they were un-successful; and (4) three Visalia grocery stores under 40,000 square feet are no longer in business.

As explained below, none of these constitute “substantial evidence” (Pub. Resources Code, § 21080, subd. (e)(2)) on which a fair argument of urban decay can be predicated.

Anderson’s assertion that he is personally unaware of any grocery stores willing to build new stores under 40,000 square feet does not support an argument that no grocers are willing to build such stores. Indeed, it is clear that at least some gro-cers in some circumstances are willing to build stores under 40,000 square feet. For one, Anderson acknowledges that Walmart built a sub-40,000 square-foot supermarket (though he argues Walmart would likely build larger stores in the fu-ture). Additionally, the report indicates that some community members were advocating the 40,000 square-foot cap in the hopes of attracting a Trader Joe’s or Whole Foods market.8

The report also identified four grocers whose business model requires their “typical” stores to be at least 50,000 square feet. But this observation pertains to four grocers, which does not suggest that other grocers are similarly un-willing to build stores under 40,000 square feet. Nor does it establish that even the four identified grocers could not build “atypical” stores to achieve profitability at smaller sizes.

In sum, the report’s evidence that some grocers would not locate in Visalia, is not enough to support a fair argument “that urban decay would result.” (Joshua Tree, supra, 1 Cal.App.5th at p. 691.) “[E]ven if a handful of properties were to remain permanently vacant, the result would not necessarily be the kind of change to the physical environment that impli-cates CEQA.” (Ibid.) Inferring that urban decay would result from the incompatibility between LU-P-67, and the business model of four grocers would be speculation.

The report also points to one grocer’s failed attempts to build stores 10,000 to 20,000 square feet in size across the United States. But these stores were one-quarter to one-half the size permitted under LU-P-67. Even if this case study indisputably showed that grocery stores under 20,000 square feet are not viable, it would not raise a fair argument that a size cap twice as large would produce similar results.

Finally, the report identifies three “sub-40,000 sq. ft. neighborhood supermarket anchors” that were “unable to

8. As noted in another report offered by appellant in superior court, Trader Joe’s has smaller stores compared to traditional grocery stores. That report also indicated that “[a]ccording to the Food Mar-keting Institute (FMI) the median size of a supermarket in the U.S. in 2013 was 46,500 sq. ft.”


maintain long-term successful operations” in Visalia. But there was no analysis provided as to why those stores closed. Absent such evidence, it is speculation to conclude that they closed because of their size.

In sum, the report does not provide the requisite basis for appellant’s challenge because (1) its analysis of causation was speculative, and (2) the potential economic consequenc-es it identifies does not “mean that urban decay would result. Common sense alone tells us nothing about the magnitude of th[e] effect.…” (Joshua Tree, supra, 1 Cal.App.5th at p. 691, original italics.) While the report suggest that some grocers would refuse to locate in Visalia under LU-P-67, it fails to support the implication that such vacancies and lower quality tenants would be so rampant as to cause urban decay. That omission is important, because “even if a handful of proper-ties were to remain permanently vacant, the result would not necessarily be the kind of change to the physical environment that implicates CEQA.” (Ibid.)

1. Bakersfield Citizens for Local Control v. City of Bakersfield Does not Mandate a

Different ResultAppellant points to our decision in Bakersfield Citizens for

Local Control v. City of Bakersfield (2004) 124 Cal.App.4th 1184 (BCLC). That case involved the development of two shopping centers totaling 1.1 million square feet of space. The two centers were 3.6 miles apart and each center was to have “a Wal-Mart Supercenter … plus a mix of large anchor stores, smaller retailers, and a gas station.” (Id. at p. 1193.) In contrast, the present case involves a land use policy within an amended general plan.

In BCLC, this court held that the EIR in that case was fa-tally defective for failing to analyze “the projects’ individual and cumulative potential to indirectly cause urban/suburban decay….” (BCLC, supra, 124 Cal.App.4th at p. 1193.) We observed that case law “has established that in appropriate circumstances CEQA requires urban decay or deterioration to be considered as an indirect environmental effect of a pro-posed project.” (Id. at p. 1205.) We held that while the pro-posal of a new shopping center does not trigger “a conclusive presumption of urban decay,” analysis of urban decay is re-quired “when there is evidence suggesting that the economic and social effects caused by the proposed shopping center ul-timately could result in urban decay or deterioration ….” (Id. at p. 1207, italics added.) We acknowledged cases like City of Pasadena v. State of California (1993) 14 Cal.App.4th 810 (City of Pasadena), disapproved on other grounds in Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 576, fn. 6, wherein the court “agreed that social and economic effects must be considered if they will cause physi-cal changes,” but nonetheless rejected the CEQA challenge presented therein because appellant had not made a sufficient showing that the project would cause physical deterioration. (BCLC, supra, 124 Cal.App.4th at p. 1206.) For the reasons explained above, we find the present record closer to City of

Pasadena than BCLC because appellant has not made a suf-ficient showing LU-P-67 may cause physical deterioration.

In dictum9 in BCLC, we rejected the appellant’s argument that study of urban decay was “not required because the re-cord does not contain substantial evidence proving that the shopping centers will cause urban decay.” (BCLC, supra, 124 Cal.App.4th at p. 1207.) We stated that appellant had articu-lated the “wrong standard of review” and that the true issue was “whether the lead agency failed to proceed as required by law.” (Id. at pp. 1207–1208.)

BCLC was correct that the appellant in that case had iden-tified the wrong standard of review. It is not a project chal-lenger’s responsibility to adduce substantial evidence prov-ing that the project will cause urban decay. But it is the proj-ect challenger’s responsibility to adduce substantial evidence supporting a fair argument that the project may cause urban decay. (E.g., Joshua Tree, supra, 1 Cal.App.5th at pp. 690–692; cf. Pub. Resources Code, § 21082.2.)

II. THE GENERAL PLAN IS NOT INTERNALLY INCONSISTENT

Appellant contends the general plan is internally inconsistent.

A. Law

General plans “must be internally consistent.” (Orange Citizens for Parks & Recreation v. Superior Court (2016) 2 Cal.5th 141, 153.) Similarly, amendments to the general plan must be internally consistent and cannot cause the general plan to become internally inconsistent. (DeVita v. County of Napa (1995) 9 Cal.4th 763, 796, fn. 12.)

“ ‘The … amendment of a general plan is a legislative act. [Citation.] A legislative act is presumed valid, and a city need not make explicit findings to support its action. [Cita-tions.] A court cannot inquire into the wisdom of a legislative act or review the merits of a local government’s policy deci-sions. [Citation.]’ ” (Dana Point, supra, 196 Cal.App.4th at p. 1619.) “ ‘A court therefore cannot disturb a general plan based on violation of the internal consistency and correlation requirements unless, based on the evidence before the city council, a reasonable person could not conclude that the plan is internally consistent or correlative. [Citation.]’ [Citation.]” (Ibid.) Appellant bears the burden of proof on this issue. (See ibid.)

B. Issue on Appeal

Appellant points to several policies and goals enunciated in the general plan, including: 1) maintaining the city’s role as a regional commercial and industrial center for surround-ing counties; 2) enhancing the city’s retail base; 3) preserving and enhancing qualities that make the city an ideal place to do business; 4) fostering a good working relationship between

9. Though we discussed the standard of review, we ultimately concluded that “[i]n any event, [appellant’s] position has no substan-tive merit.” (BCLC, supra, 124 Cal.App.4th at p. 1208.)


the city and business community; 5) striving for a balanced mix of local, regional, and national retailers; 6) attracting new retail development; 7) supporting infill development which in turn offers various fiscal, social, economic and environmental benefits; 8) promoting pedestrian-oriented retail.10 With re-spect to infill, the general plan contains policies concerning the minimization of urban sprawl, and the encouragement of compact, concentric and contiguous development. Appel-lant argues LU-P-67 conflicts with these goals and policies because it will prohibit development in neighborhood com-mercial sites, some of which are surrounded by urbanized development. Appellant points to the Anderson report and city staff analysis as evidence that the rigidity of LU-P-67’s tenant size cap is unwise.

C. Analysis

Appellant’s argument fails to appreciate the standard of review we must apply, and, more broadly, our role in this process. Determining the proper means of encouraging infill development or market flexibility is a policy question for po-litical bodies, not a legal question for the courts. Our role is to determine whether any reasonable person could conclude that LU-P-67 is consistent with the stated goals of the general plan (e.g., infill development, market flexibility). We con-clude that a reasonable person could find the plan internally consistent on several rationales.

First, Visalia could have concluded that the tenant size cap would not impede infill development. The general plan proposed 14 undeveloped neighborhood commercial cen-ters. The general plan also utilized a Commercial Mixed Use designation at which larger tenants are permitted. The general plan observes that the “new Commercial Mixed Use designation, applied to much of South Mooney Boulevard north of Caldwell, as well as along other major arterials and community shopping nodes, provides needed flexibility in retail and service formats and clustering.” Visalia could have reasonably concluded that LU-P-67 would not likely impede infill development because larger tenants could utilize ar-eas designated commercial mixed use, while smaller tenants could fill the 14 anticipated neighborhood commercial sites. Because that determination is reasonable, it is immaterial that the Anderson report supports a different view.

Second, promoting infill development in whatever form it may take is not the general plan’s goal. The general plan seeks specific kinds of development (e.g., pedestrian-friendly retail). Once the general plan declares of goal of encouraging infill development, it is not prohibited from seeking to restrict the nature of that development, even if those restrictions may preclude some infill development. Here, LU-P-67 caps ten-

10. Appellant also suggests LU-P-67 is inconsistent with the gen-eral plan’s stated “vision” which “reflects a general desire to increase flexibility for developers in new growth areas.” But increasing flexibil-ity for developers is one of several interests expressed in the general plan. The general plan is not obligated to pursue that goal to the exclu-sion of all others. Otherwise, the general plan could not impose any re-strictions on developers such as basic zoning and land use regulations.

ants in neighborhood commercial zones at 40,000 square feet. Even assuming for the sake of argument that appellant is indisputably correct this policy will discourage some infill development, the city may reasonably decide to accept that consequence as the cost of pursuing other goals (e.g., help-ing smaller businesses, promoting pedestrian-oriented retail, etc.). In sum, just because the general plan declares a goal of promoting infill development does not mean all of its policies must encourage all types of infill development. General plans must balance various interests, and the fact that one stated goal must yield to another does not mean the general plan is fatally inconsistent. Few, if any, general plans would survive such a standard.

As demonstrated by the two rationales described above, a reasonable person could conclude LU-P-67 is not incon-sistent with the stated goals and policies of the general plan. As a result, we reject appellant’s internal inconsistency chal-lenge. (See Dana Point, supra, 196 Cal.App.4th at p. 1619 [“ ‘A court … cannot disturb a general plan based on … inter-nal consistency … unless, based on the evidence before the city council, a reasonable person could not conclude that the plan is internally consistent …’ ”].)

[ PART III, See ORDER*, ]

DISPOSITIONThe judgment is affirmed.

POOCHIGIAN, Acting P.J.WE CONCUR: DETJEN, J., BLACK,† J.

† Judge of the Fresno Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the Cali-fornia Constitution.

recorder · pdf fileparty’s demurrer to state court action did not result in waiver of...

Documents