To the relief of many public agencies, the state Supreme Court has overturned an appellate court decision that could have increased the number of "projects" subject to the California Environmental Quality Act.

In a 7-0 decision, the California Supreme Court ruled that Sacramento County was not required to complete an environmental review before denying a conditional use permit renewal for a private airport. Project denials are specifically exempted from the California Environmental Quality Act (CEQA), the court ruled.

Attorneys on both sides of the case said the decision clarifies the law regarding when a public agency must complete a CEQA review.

A collection of state agencies and the California State Association of Counties had asked the high court to overturn the appellate court's decision because of its potential to expand CEQA responsibilities, noted Krista Whitman, deputy Sacramento County counsel.

In 2008, the Third District Court of Appeal ruled that the normal exemption for project denials did not apply here because the county's refusal to grant a requested use permit renewal would result in closure of the airport and "the potential for physical change in the environment" (see CP&DR Legal Digest, September 2008). "Accordingly, the county's action constitutes a CEQA ‘project,'" the appellate panel concluded.

"The Court of Appeal erred," California Supreme Court Justice Carol Corrigan wrote, "because it misconstrued the nature of the project at issue. Declining to renew the conditional use permit was not a public project under CEQA, because the county did not ‘directly undertake' to close the airport. Instead, it decided not to reauthorize a private activity that required ‘the issuance of a permit.' The airport operation was the ‘project' in question, and projects rejected by a public agency are specifically exempted from CEQA's requirements."

Although not pleased with the decision, airport attorney Lanny Winberry conceded the decision "is a clarification of the rule."

"Our argument was that an approval of those things [a use permit extension or renewal] would merely preserve the status quo," Winberry said. "But the denial of those things would change the status quo, and that could have significant impacts."

The Supreme Court, however, distinguished between private projects such as the airport at issue and facilities operated by a public agency. Twice in recent years, courts have ruled that closure of public facilities are "projects" under CEQA. Here, however, "closing the airport was not an ‘activity directly undertaken' by the county," wrote Corrigan, citing Public Resources Code § 21065, subdivision (a).

The facts of the case are unusual. Sunset Skyranch began operating near Elk Grove in 1934, primarily as an airport for crop dusters. At the time, there were no applicable zoning regulations. In 1971, Sacramento County issued a two-year conditional use permit (CUP) for the airport, which at the time was merely a dirt landing strip and a handful of crop dusters. Airport owner Daniel Lang never renewed the CUP, but he did proceed to improve and expand the facility. By the late 1980s, Sunset Skyranch had two paved runways, about 20 hangers and 60 airplanes. There were roughly 30,000 annual takeoffs and landings at the facility.

In 1989, Sacramento County denied Lang a business license because his CUP was long expired. When the county declined to issue a certificate of nonconforming use, Lang sued the county and lost. In 1997, Lang and Sunset Skyranch Pilots Association applied for a new CUP. The county approved a five-year CUP in October 1999. Days before that permit was set to expire, the county Planning Commission approved what it declared to be a final two-year renewal. Development consultant Taylor & Wiley appealed, and the Board of Supervisors voted 4-1 to deny the permit renewal because urban growth in Elk Grove (which incorporated in 2000) was encroaching on the airport.

Lang and the pilots association sued the county. Their primary argument was that the county's action conflicted with the State Aeronautics Act, which, they said, required the county to permit continued operation of the facility despite urban growth conflicts. Both the trial court and the Court of Appeal rejected this argument. Lang and the pilots also argued the county violated CEQA by not completing an environmental review before denying the permit renewal. The County of Appeal accepted that contention, concluding the county's decision had implications for the airport property and pilots that the county had to study. The California Supreme Court in 2008 accepted the case but chose to review only the CEQA issues raised by the county, and not the State Aeronautics Act interpretation questioned by Sunset Skyranch and the pilots.

For their CEQA arguments, the airport and pilots association relied heavily on two cases – San Lorenzo Valley Community Advocates for Responsible Education v. San Lorenzo Valley Unified School Dist., (2006) 139 Cal.App.4th 1356, and Association for a Cleaner Environment v. Yosemite Community College Dist., (2004) 116 Cal.App.4th 629. In the San Lorenzo Valley case, the court ruled that a plan to close two elementary schools was a project under CEQA, but was categorically exempt from environmental review (see CP&DR Legal Digest, July 2006) []. In the other case, the court ruled that the community college district's decision to close a shooting range and transfer operations elsewhere was a project subject to CEQA review (see CP&DR Legal Digest, April 2004).

The state Supreme Court, however, distinguished those cases from the one at hand. While the school district and community college district took actions to close a public facility, Sacramento County was not actively engaged in closing the private Sunset Skyranch.

"Notably, if the airport had decided on its own to go out of business and allow the CUP to expire, there would have been no occasion for CEQA review by the county," Corrigan wrote. "It was the airport that sought a new approval for its operations, and the county's denial of that project application was statutorily exempt from CEQA review under [Public Resources Code] § 21080, subdivision (b)(5)."

The fact that the airport sought a CUP renewal, rather than a brand new CUP, was of no matter, Corrigan added.

What the decision makes clear, said Taylor & Wiley attorney Kate Wheatley, is that a public agency may at any time exercise the CEQA exemption for a project the agency denies.

Meanwhile, the 76-year-old airport's days appear numbered. County officials in the past have vowed to shut down the airport. The City of Elk Grove, whose city boundary currently is located across the street from the airport, has an application pending before the Sacramento County Local Agency Formation Commission to expand into the area. And Elk Grove appears to have no use for the airport, as the city and the county recently released a draft of an agreement that envisions extensive residential development in the area.

The Case:
Sunset Skyranch Pilots Association v. County of Sacramento, No. S165861, 2009 DJDAR 17959. Filed December 28, 2009.
The Lawyers:
For Sunset Skyranch: Lanny Winberry, (916) 386-4423.
For the county Krista Whitman, county counsel's office, (916) 874-5544.
For Taylor & Wiley: John Taylor, (916) 929-5545.